Gold Drops as Dollar Strengthens - 15 April 2016

Gold prices continued to fall yesterday, extending losses to third straight session, as a stronger dollar reduced the appeal of the precious metal as an alternative investment. Although the XAU/USD pair bounced up quite nicely from the top of the Ichimoku cloud on the 4-hour time frame, the bulls failed the overcome the resistance in the 1246/3 region. As a result, prices dropped with momentum all the way back to the 1223.80 level where the top of the daily cloud and short-term bullish trend line intersect.

It appears that the market is trying to form a base for a recovery. As I mentioned in my previous analysis, this area (between the 1227.50 and 1222 levels) is a strategic camp for the bulls to defend. If they can push and hold prices above 1227.50, they may have an opportunity to test the 1238.67-1236.37 area. Beyond that, the 1246/3 zone stands out as obvious resistance. Penetrating this significant barrier could provide the bulls extra fuel they need to reach the next destination, the 1263.50-1258.60 area.

XAUUSD Daily

On the other hand, if the bears win the battle and drag prices below the 1222 level, buyers may have to wait a little longer as the market will be aiming for 1215/3. A break down below 1215/3 would make me think that XAU/USD will pay a visit to the anticipated support zone that stretches from 1208 to 1205.

XAUUSD H4

Alp Kocak
Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.