FX.co ★ Technical analysis of Gold for May 3, 2016

Gold made a shallow pullback yesterday but remains inside a short-term bullish trend targeting $1,325. The price has some more upside left but as I said in previous posts, Gold bulls need to be very cautious.

Black line support

Yellow area - overbought signal

Gold has broken below the short-term support by the tenkan-sen and is trying to break above it again today. Resistance is at $1,297. The next support is at $1,270. The stochastic is overbought and turning lower as the RSI also is. We could spot another bearish divergence in these oscillators before a meaningful bearish reversal in the price.

The gold price is expected to reach the upward sloping red trend line that touches the two previous highs. The stochastic is diverging and I believe a new high in the area of $1,325 will be the final one before a pullback towards $1,150. The trend remains bullish for now with no reversal signal yet. Important short-term support is at $1,270.