XAU/USD technical analysis: Gold in a major downside correction

Gold price started a major downside correction from well above the $1,295 level against the US Dollar. The price declined and broke the $1,292 and $1,290 and $1,285 support levels on FXOpen.

During the decline, there was a break below a major bullish trend line with support at $1,291 on the hourly chart. Finally, there was a close below the $1,285 support and the 50 hourly simple moving average.

The price traded as low as $1,280 and it recently corrected higher. However, a connecting bearish trend line on the same chart at $1,284 acted as a solid resistance along with the 23.6% Fib retracement level of the recent decline from the $1,292 high to $1,280 low.

On the downside, a close below the $1,280 support may spark more bearish moves and the price could extend losses towards the $1,272 support area in the near term.

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