Gold Breakout of Bullish Channel – Safe Haven Fades
Gold is trading near $1,306 after testing a new resistance area of $ 1,312. As you can see, gold has violated the bullish channel at $1,312.
The precious metal lost the safe haven appeal after the uncertainties over Brexit started supporting the US dollar as investors keep their investments out of British Pound. These investments are now going into the most reliable currency, the US dollar.
The stronger dollar is ultimately making gold expensive for the foreigners, causing a drop in its demand. Hence, a reduction in demand is resulting in a decline in gold prices.
GOLD is trading near $1,306 after testing a new resistance area of $1,312. As you can see, gold has violated the bullish channel at $1,312. The formation of Doji pattern and other neutral candles outside bullish channel are confirming the bearish bias of traders.
The relative strength index indicator is in the selling zone. On the 4-hour chart, gold is likely to drop further with a target of $1,304 and the psychological level of $1,300.
The trade idea is to stay bearish below $1,312 and bullish above $1,300 with a 40 pips stop loss on both sides.
Good luck!
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