False breakout on gold

A false breakout is when the price of an asset manages to break above an important resistance level or below an important support level, but the momentum is lost and the price cannot continue further, only to fall right back to the consolidation area where it was before. On the daily chart of gold we can see that the commodity was consolidating during the last 22 sessions in between the 200 day EMA (blue line) and the 55 day EMA (purple line). During yesterday’s session, the precious metal broke above the 55 day EMA and came close to the 1300 level without touching it. The bullish momentum was not enough and today the price drops below the 55 day EMA and enters the congestion area where it was before. From this point on the price may head in any direction. Above the 55 day EMA at the 1283 level, its next resistance is still the 1300 level. Below the 200 day EMA at the 1268 level, its next support level could be the 1200 zone.