Gold (XAUUSD) Becomes Overbought As Price Hits Major Resistance Level

Market Analysis – February 6

Gold (XAUUSD) has become overbought as the price reaches a major resistance level. The Relative Strength Index (RSI) currently stands at 73.37, indicating overbought conditions and suggesting a possible continuation of bearish movement in the short term. Meanwhile, the Simple Moving Average (SMA) at $2,800 serves as a potential support level that could temporarily halt the price decline. These indicators point to exhaustion in the bullish momentum, reinforcing the likelihood of a bearish scenario.

Gold Key Levels

Resistance Levels: $2,790, $2,880, $2,960
Support Levels: $2,580, $2,540, $2,470

Gold Long-Term Trend: Bullish

The chart illustrates a double-top pattern near $2,880, confirming a reversal from the prior uptrend. The price has surpassed the resistance at the double top, indicating a bullish market. The rising trendline has been tested multiple times and remains a crucial area to monitor for a potential continuation of the bullish trend.

A bearish movement is expected to persist until the price reaches the major ascending trendline. A rebound from this trendline could signal the resumption of the long-term bullish trend, targeting resistance at $2,960. However, if this trendline fails to hold, prices could decline further, testing support levels around $2,580.

Gold Short-Term Trend: Bearish

XAUUSD exhibits bearish pressure as it trades below the $2,880 resistance level. The rising trendline could serve as critical support and act as a potential reversal zone. However, a break below this trendline might trigger a sharp decline. Traders are closely monitoring these key levels to determine the next movement in the market, with forex signals playing a role in identifying potential entry points.

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