XAU/USD: gold is undergoing correction; however, it is likely to decline

May 27, 2015

Current trend

Following yesterday’s intensive rise in the USD, today, with the opening Asian session, the market is undergoing correction. The market needs timeout before the next leap forward.

After the rebound from strong resistance levels of 1221.50 (ÅÌÀ200) and Fibonacci  50%  (1225.60) last week, the pair XAU/USD has reached the level of 1185.25 (Fibonacci  23.6%) yesterday. It is likely that after the break the pair will go down to the lows of this year at the level of $1150.00 per troy ounce. In case of this scenario of downtrend, the pair will go to resistance levels of 1185.00, 1182.50, 1177.60, 1174.50 and 1162.50.

On the four-hour chart the price had crossed resistance levels of 1202.10 (ÅÌÀ144) and 1200.80 (ÅÌÀ200) from top to bottom and is going down to went to 1185.25 (Fibonacci 23.6%) and then, it may go further down to the weekly lows of 1149.50. The indicators SDL and OsMA are in the oversold zone, while Stochastic is in the overbought zone. It either requires the correction or indicates strong downtrend. In case of breakdown of the level of 1185.25, the price will accelerate downward movement.

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