Price Rejected at 50-Day Line Resistance
Last Friday, gold fell sharply through the 50-Day MA following a bullish trend continuation signal earlier in the day. And it closed at the low of the day, which was also a weekly close. That set up a potentially bearish shooting star weekly candlestick pattern. A decline below the weekly low of 2,287 signals a bearish weekly trend continuation signal indicating that lower price support targets are more likely to be approached. On the daily chart, a drop below the swing low of 2,277 would provide further bearish confirmation of the weekly signal.
Close Above 2,344 Needed for Sign of Strength
The 50-Day line previously marked trend support for the near-term uptrend. Once busted, a subsequent test of resistance and downside rejection is bearish. Whether that plays out with a new retracement low or not remains to be seen. Today’s high along with the 50-Day MA at 2,344 is a key near-term resistance area. This means that a rise above followed by a daily close above 2,344, is a sign of strength that could lead to further appreciation in the price of gold.
Lower Support Zone Starts at 2,216
A lower support zone is highlighted on the chart from 2,216 to 2,195. The most recent more significant bull breakout occurred at 2,195. So, going back to the starting point of the most recent leg up is a possibility. Depending on when reached, potential support around the lower uptrend line may also provide a guide. Notice that it is the lower line of a rising parallel trend channel. Gold found resistance recently near the top channel line, which led to the current correction. The first target below the May swing low is the completion of a falling ABCD pattern at 2,252.
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