Spot gold rebounds in front of the key support level

July 20, 2021 - 4 days ago
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The precious yellow metal sank for a second straight session to an intraday low of $1,794 per ounce on Monday, before reigniting bullish activity in front of the key bearish trigger level at $1,786-88.

The weaker price action occurred on Monday as the US Dollar Index (US DXY), which tracks the greenback strength against a basket of six currencies, claimed its 93.00 objectives (16 weeks high) before trimming gains, and ends the New York session posting a Dragonfly Doji.

A Doji candlestick signals market indecision.

The Dragonfly Doji is a type of single Japanese candlestick pattern formed when the high, open, and close prices are the same creating a ‘T’ shape.

The whip-saw price action is expected to continue this week as investors weigh on inflation fears after Friday’s release of the U.S. consumer sentiment index from the University of Michigan showed that consumers believe prices will jump 4.8% over the next year.

This is the steepest climb since August 2008.

Early last week, the June Consumer Price Index showed that inflation jumped 5.4% year-over-year.

Viewing the technical display, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator has rebounded from the 50-midway point, while the Moving Average Convergence Divergence (MACD) supports a positive signal.

The Average Directional Movement Index (ADX) trend indicator decline suggests the presence of a trading market and the absence of a trend.

Considering the rebound in front of the bearish trigger point may first see a short squeeze to $1,824-28 resistance before any reversal.

Still remain cautious from the key levels at $1,833-35 (topside) and $1,786 (bottom), to which, if breached negates the upside risk and exposes the $1,760 region.

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