Gold drops beneath 1,900 but appears to be oversold.
- Gold retreats below the 1,900 handle to its lowest level in a month
- The decline shows no signs of easing while widening Bollinger bands point to high volatility
- Momentum indicators deep in their oversold territories, hinting at a potential bounce
Gold has been in a solid downtrend in the four-hour chart, violating both its 50- and 200-period simple moving averages (SMAs) and falling below the 1,900 psychological mark. However, the short-term oscillators currently suggest that the dip could be overstretched, thus a rebound should not be ruled out.
If the bears attempt to push the price lower, immediate support could be met at the June low of 1,893. Falling to halt there, bullion could descend towards the August support of 1,889. Further declines may then cease at the August bottom of 1,885, which is the lowest level observed since March.
Alternatively, an imminent bounce might initially stall at the September support of 1,901, which might serve as resistance in the future. Surpassing that region, the price could face 1,914 ahead of the September resistance of 1,931.
All in all, gold seems to be under relentless downside pressure, which has pushed the price into oversold conditions. Can the bulls strike back?