Broader Correction Structure from January High
Gold has been in a corrective phase since hitting a peak of $5,598 in late-January. There have been two legs down from that high, with a swing low of $4,099 established at 200-day moving average support in March. A possible third leg down triggered on a breakdown from a rising wedge continuation pattern in April. That bearish setup remains relevant while gold trades below the 50-day and 100-day moving averages.
Support Levels and Potential Downside Extension
The initial target from the wedge is the beginning of the formation near $4,305. However, the 200-day average has recently proven to be support and therefore should do so again. It is now at $4,329 and rising. Since it is now above the beginning of the wedge, the likelihood of it being tested as support increases but only if additional bearish signs emerge.
Short-Term Inflection Within Larger Range Structure
A minor swing low of $4,648 was established on Monday and it marks key short-term support. If it fails, another leg down may have begun. There is also the possibility that the larger bearish correction could instead complete through time rather than price, by moving relatively sideways and consolidating between the 100-day average on the top and the 200-day average below.
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