Gold moved higher Tuesday, but it doesn’t seem that it had a major impact on even the short-term outlook as even the short-term resistance line wasn’t broken.
Once again nothing changed from this perspective and what we wrote previously about the above chart remains up-to-date:
(…) the outlook remains just as it was before this week began – it remains bearish.
The sell signal from the Stochastic indicator remains clearly visible and gold remains within the declining trend channel.
Although this year’s rally might seem big, gold actually didn’t even manage to move to the 38.2% Fibonacci retracement based on the 2012 – 2015 decline. Consequently, this year’s rally seems to be nothing more than just a correction within a bigger downtrend.
As far as the short term is concerned, we previously wrote the following:
(…), the trend remains down as well. Gold declined and practically erased Tuesday’s rally. The market participants seem to have realized that actually nothing changed based on Yellen’s recent comments and things are returning to normal after some very short-term volatility. (…), the previous downtrend remains in place.
Why a downtrend? Most importantly, because a downtrend is visible on the long-term gold chart, but also because the rising black short-term support line was clearly broken and this breakdown was more than verified.