Gold resumed its bullish momentum on Monday after Friday’s pause, ticking slightly above the 1,900 level.
Technically, the short-term bias is viewed as positive given the strength in the RSI and the MACD as well as the bullish intersection between the red Tenkan-sen and blue Kijun-sen lines.
However, for the precious metal to attract new buyers, it should close decisively above the roof of the descending channel seen around 1,920, where the surface of the Ichimoku cloud and the 50% Fibonacci retracement of the 2,079 – 1,764 downleg are also placed. Such a move could see an extension towards the 61.8% Fibonacci of 1,956 and the previous peak of 1,965. Another violation at this point would break the negative structure in the four-month picture, though it is worthy to note that the bearish cross between the 20- and 50-day simple moving averages (SMAs) remains intact, supporting the downward direction in the market.
On the flip side, a pullback below the 38.2% Fibonacci of 1,882 may stretch towards the 23.6% Fibonacci of 1,837. Slightly lower, the 200-day SMA at 1,815 could attract special attention before all eyes turn to the 1,764 bottom.
Summarizing, gold is in a challenging situation as the bulls are requested to breach the descending channel to clarify their dominance. Failure to do so could bring the sellers back into play.