Gold could not find enough buying interest to close above the 1,796 resistance on Tuesday despite the bounce off the 20-day low of 1,781 in the four-hour chart.
Nevertheless, traders could still derive some optimism from the momentum indicators as the RSI has formed a double bottom below its 30 oversold level, while the Stochastics are swiftly strengthening after printing a similar pattern below 20. The MACD is encouragingly swinging upwards in the negative area, reflecting fading selling forces.
Hence, the bulls may not easily give up the battle with the 1,796 barrier. Should they win this time, the next obstacle could pop up near the 200-period at 1,805, where the 23.6% Fibonacci retracement of the latest freefall happens to be. If the swing high of 1,812 proves easy to clear, the price could then crawl straight up to the 38.2% Fibonacci of 1,818 and the 20-period SMA. A decisive close higher from here would open the door for the key resistance of 1,833.
Alternatively, if selling pressures persist, all eyes will turn to the supportive trendline drawn from the August low of 1,680, currently seen around 1,778. A sustainable decline lower from here could stretch towards the monthly low of 1,758, while a more aggressive sell-off may see a test near the October 6 floor of 1,745.
In summary, gold seems to have found a bottom in the oversold area, signalling buying pressures could resume in the short-term despite the latest pullback in the price. A step above 1,796 could activate the next bullish action.
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