Gold Enters Overbought Region as Sellers Emerge to Lower Prices

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Key Resistance Levels: $1,900, $1,950, $2000
Key Support Levels: $1,750, $1, 700, $1,650

Gold (XAUUSD) Long-term Trend: Bullish
The Gold price has been moving in a series of higher highs and higher lows as sellers emerge to lower prices. The $1,825 high is currently being tested by XAUUSD, but it will be rejected at $1,828. Positive momentum has led to the overbought zone. Since November 16, buyers have been unable to keep the price above the $1,840 high. On the upswing of November 16, a retraced candle body tested the 78.6% Fibonacci retracement line. The retracement predicts that Gold will rise but will reverse course at the level of the 1.272 Fibonacci extensions, or $1,828.08 per ounce. Given that Gold has entered the overbought zone of the market, price increases are unlikely to persist.

Gold Enters Overbought Region as Sellers Emerge to Lower Prices
XAUUSD – Daily Chart

Daily Chart Indicators Reading:
Gold is at level 64 on the Relative Strength Index for period 14. It is in the rising zone as it approaches the overbought region of the market. The price bars continued holding above the moving average lines suggesting that the price of Gold is rising. The uptrend is indicated by the moving average lines’ northward pointing direction.

Gold (XAUUSD) Medium-term bias: Bullish
On the 4-hour chart, Gold is trading in the bullish trend zone but has retraced above the moving average lines. It has started to fall since hitting a high of $1,820. It has been able to maintain above the $1,800 support despite retracing. In the overbought condition, sellers will inevitably enter the market and drop prices.

Gold Enters Overbought Region as Sellers Emerge to Lower Prices
XAUUSD – 4 Hour Chart

4-Hour Chart Indicators Reading
Gold is in a bearish momentum because it is below the daily Stochastic level of 80. The price bars are above the moving averages suggesting that Gold prices may be rising. The rising slope of the moving average lines is another sign of an upswing.

General Outlook for Gold (XAUUSD)
Gold’s price has entered an overbought zone as sellers emerge to lower prices. More price hikes are unlikely as the market approaches overbought territory. Bullish weariness has been reached with the current climb. The current increasing trend is expected to reverse itself at $1,828.08.


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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.