Gold created bearish outside day candle, is the rally over?

• Tuesday's price action engulfed Monday's high-low (bearish outside day candle). 
• Gold's decline could be short-lived as markets have a hard time trusting Fed's hawkish dot plot. 

Gold (XAU/USD) created a bearish outside day candle on Tuesday, signaling the rally from the March 20 low of $1,307 may have run out of steam.

The metal dropped to $1,330 yesterday as the dollar index (DXY) rose to 89.25. However, the greenback trimmed gains and closed below 89.00, helping the yellow metal regain poise. As of writing, XAU/USD is flatlined around $1,346 and so is the American dollar. 

Despite the pullback, the bias remains bullish as suggested by the momentum studies - 5,10, and 21 MAs (moving averages) are sloping upwards. Further, the dollar rallies will probably be short-lived as long as the rate market factors in a less aggressive Fed, according to Reuters report. As of writing, short-term interest rate futures are factoring-in only about 75 basis points of tightening until the end of 2019. 

Gold Technical Levels

A break above $1,348 (ascending 5day MA) could yield a re-test of $1,357 (March 27 high). A close above the same would signal a continuation of the rally from the March 20 low of $1,307 and open doors for $1,366 (Jan. 25 high). On the downside, acceptance below $1,340 (previous day's low) would allow a stronger pullback to $1,330 (50-day MA) and $1,324 (Jan. 18 low).