It appears that the XAU/USD pair found some support during the Asian session today after four consecutive days of losses. Although the pair has been suffering from strengthening U.S. dollar since October, the trading action is getting tight recently. Global growth concerns and weakening data from China have been weighing on gold prices as well. Pattern on the daily charts suggests that the technical selling pressure is losing momentum. In the meantime, the pair is consolidating between the 1587 and 1564 levels. I think that we will stay within that area in the near term. On the daily and 4-hour charts, prices are below the Ichimoku clouds and the Tenkan-Sen line (nine-period moving average, red line) is below the Kijun-Sen line (twenty six-day moving average, green line). However, the pair returned to the trading channel which prices have been running in previously and short-term charts are turning bullish.
Because of that I would like to wait until this battle is over. If the bulls win the fight and push prices above 1587, it is likely that the pair will test 1597.77 and 1604. A close above 1604 could ease bearish pressure and would give the bulls a chance to march towards 1625.64. If we break below 1564, I think the bears will be dominating the pair once again. Support to the downside can be found at 1555, 1547.92 and 1532.
