Mighty bearish engulfment by the end of yesterday’s trading session is hardly a full-fledged trading setup as the amplitude of trending downswing is so big that we can talk about gold being oversold. Yes, chances of further decline are definitely high. But the necessity of correction for such a structure is at least the same. It’s time to stay out of rush.
Local downtrend has unsteady structure with regular renewal of local extremums. At this moment the strong pivot-zone 1687.10-1691.37 is being tested, where offer volume might be concentrated sufficient for switching the asset to another trending stage of decline (black arrow). But we won’t rule out a scenario with correction to the psychological level 1700.00 (red scenario).
Main scenario: Decline from 1687.10-1691.37 to 1670.00, 1665.00.
Alternative scenario: Extension of upward correction to 1700.07-1701.66.
Seeking local sell signals at 1687.10-1691.37 and 1700.07-1701.66.
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