By Anton Eljwizat – Gold hit a record high of $1,315 an ounce this week, extending a two-week rally of fresh records on concerns over an economic recovery. Gold has made a significant upward correction, which can be directly correlated with the bullish trend of the EUR/USD cross. As I will demonstrate below, the price of gold may very well be heading for a reversal. This recent activity has raised the stakes for traders. From here on, the forex and commodity markets will see very high volatility indeed.
• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI) and Williams Percent Range.
• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.
• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.
• Point 3: The RSI signals that the price of this pair currently floats in the over-bought territory, indicating downward pressure.
• Point 4: The Williams Percent Ranges is showing that this pair is heavily over-sold and may be experiencing strong upward pressure.
Gold Daily Chart
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