SINGAPORE: Spot gold may retest a support at $1,991 per ounce, a break below which could open the way towards $1,961-$1,978 range. The deep fall on April 14 strongly suggests a completion of a wave (5) from $1,934.19.
This is the final wave of a five-wave cycle from $1,804.20. The cycle itself may have peaked as well. A retracement analysis on the rise from $1,934.19 reveals perfect support of $1,991, which triggered a bounce. It is not very clear how strong the current bounce would be.
A break above $2,005 could confirm the extension of the bounce towards $2,022, which may serve as a limit.
On the daily chart, a bearish engulfing formed between April 13 and April 14.
Spot gold may test support at $1,963
The pattern suggests not only a further fall on Monday but also a reversal of the uptrend from the Feb. 28 low of $1,804.20.
The bearish divergence on the RSI confirms an exhaustion of the rally.
A decent correction is due.
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