Gold - Price is at resistance with bearish RSI divergencePrice is at resistance with bearish RSI divergence (overbought at 72.39) and a potential double top forming. Volume is declining, indicating weakening momentum.
Stochastic Oscillator (14, 1, 3): The Stochastic is at 90.48, well into the overbought territory (above 80). This indicates that the price may be overextended and due for a pullback.
Relative Strength Index (RSI, 14): The RSI is at 72.39, also in the overbought zone (above 70). Additionally, there’s a bearish divergence—while the price made a higher high near $3,135.060, the RSI made a lower high, signaling weakening momentum.
Simple Moving Average (SMA, 14, 2) on RSI: The RSI’s SMA is at 68.05, showing that the RSI is still elevated but trending downward, supporting the bearish divergence.
Resistance Rejection: The price is failing to break through the $3,132.528–$3,135.060 resistance zone, as evidenced by the red circle showing a sharp rejection.
Bearish Divergence: The RSI (72.39) shows a bearish divergence, indicating that the upward momentum is fading despite the price hitting a higher high.
Overbought Indicators: Both the Stochastic (90.48) and RSI (72.39) are in overbought territory, suggesting the price is overextended and likely to correct.
Volume Decline: Decreasing volume on the recent push to resistance indicates a lack of buying conviction, increasing the likelihood of a reversal.
Double Top Potential: The price action near $3,135.060 resembles a double top pattern, a bearish reversal setup, especially with the rejection at this level.
Monitor for Confirmation: Watch for a bearish candlestick pattern (e.g., a shooting star or bearish engulfing) on the 5-minute chart to confirm the reversal before entering the trade.
Risk Management: Only risk a small percentage of your account (e.g., 1-2%) on this trade. Adjust position size based on the stop loss distance.
