By: DailyForex.com
Gold declined for the first time in four sessions as investors took profits from a recent rally to twelve-week highs. The XAU/USD pair initially tried to break out to the upside but the expected resistance between 1124 and 1127 kicked in and capped the market, dragging it back to the previous resistance now flipped to support at 1113. In economic news on Thursday, the Commerce Department reported that demand for durable goods fell 5.1% in December.
Technically, the odds favor the bulls as long as the XAU/USD pair remains above the cloud on the 4-hour time frame. Bullish Tenkan-Sen (nine-period moving average, red line) - Kijun-Sen (twenty six-period moving average, green line) crosses on both the daily and 4-hour charts also support this view. However, trading within the boundaries of the daily Ichimoku cloud suggests there is an intense battle going on.
Based on the charts, I think the bulls have to push prices back above the 1120/19 area where the top of the daily cloud and 4-hourly Tenkan-Sen converge, if they intend to make another assault on the 1127/4 resistance. Breaking through 1127 could signal a run up 1141. To the downside, keep an eye on the 1113 level. A break below 1113 would set the XAU/USD pair up for a test of the support at 1109. Falling through 1109 (at least on the 4-hour chart) could open up the risk of a move towards the Ichimoku cloud. In that case, the 1103 and 1099 levels will be the next possible targets.
