The sell signals from the RSI, RMI, and the MACD worked for the gold. The MACD and MACD signal spread had reached the key +20 level and gave a sell signal. As expected in our earlier post, selling pressures for gold increased dramatically as the price gets close to 1922 resistance.
The last 5 times that a sell signal is given, the minimum price decrease was 17.50%, which means if that to happen, the target will be below 1600. But can we a more than $150 drop?
Gold formed a reverse pennant formation and break it to the downside. 1765 is also a key Fibonacci level and medium-term support. This is signaling that the bearish look may continue further. The first key support will be around 1735 but if pennant formation reaches its target, an important support level for the long-term 1675 can be tested again. Below 1675 level pricing odds are low at the moment in our view. Fundamentals don’t signal that much drop just yet, and technically it is a powerful support. But supports break and fundamentals change all the time.