Tuesday’s decline and its “implications”.
In today’s gold price forecast, I decided to share with you my insights from yesterday’s Quick Gold Alert. Have a nice read!
Technical Picture of Gold
Let’s start today’s Quick Gold Alert with the 4-hour chart and quotes from yesterday’s alert:
(…) So, when can we expect a bigger move to the downside?
In my opinion, a bigger decline will be more likely and reliable only if the sellers manage to close the day under the above-mentioned green support area and the next support zone about which you could read on Thursday:
If the bulls fail here, we can see a test of the 38.2% Fibonacci retracement (based on the entire Aug. upward move) and the Aug. 14 low of $2,506.45, which (…) together create the third purple support zone marked with 3).
From today’s point of view, we see that gold bears attacked after the U.S. market open once again, which resulted not only in a re-test of the green support zone based on the early and mid-Aug. peaks, but also in a drop to the above-mentioned third purple support zone.
As you see, this solid support area withstood the selling pressure once again and together with the buy signals generated by the indicators lured some buyers to the trading floor, generating a rebound in the following hours.
Did this upswing change anything in the very short-term?
Not really, because it didn’t even reach the previously broken green rising support line based on early-Aug lows, signaling that yesterday’s assumption was up to date:
(…) we should keep in mind that as long as gold futures are trading under the above-mentioned green line all upswings should be considered as nothing more than verifications of the earlier breakdown.
What does it mean?
In my opinion, such price action suggests that another attempt to move lower (…) should not surprise us in the very near future.
Looking at the above chart, we see that the sellers noticed their opponents’ weakness and pushed the price lower once again earlier today.
So, how low could gold futures go?
In my opinion, the first downside target will be the above-mentioned third purple support zone (marked with 3) created by the 38.2% Fibonacci retracement (based on the entire Aug. upward move) and the Aug. 14 low of $2,506.45, which continues to serve as one of the key supports at the moment.
If it withstands another bears’ attack, we could see a comeback move and at least a test of the previously broken lower border of the orange declining channel (marked with dashed lines) at around $2,521. If it is broken, the bulls can test today’s intraday high of $2,528.40.
(…) How the recent price action affected the daily chart?
From this perspective, we see that although gold futures moved lower yesterday, hitting an intraday low of $2,504.40 the overall situation in the short term hasn’t changed much as they finished the day at $2,523, invalidating the earlier breakdown under the early-Aug. peak, which is an encouraging development.
Earlier today, we observed another attempt to move lower (one more downswing under the green horizontal line based on the mentioned peak), but in my opinion, yesterday’s assumption is still valid:
(…) In my opinion, a bigger decline will be more likely and reliable only if the sellers manage to close the day under the above-mentioned green support area and the next support zone about which you could read on Thursday:
If the bulls fail here, we can see a test of the 38.2% Fibonacci retracement (based on the entire Aug. upward move) and the Aug. 14 low of $2,506.45, which (…) together create the third purple support zone marked with 3).
Until this time, the buyers still have important allies, which can encourage them to fight (…)
Summing up, gold bears showed claws and pushed the futures to important downside targets about which you could read on Thursday. If the above-mentioned key supports withstand the selling pressure, a rebound from here and another attempt to move higher should not surprise us. However, if the bulls lose these allies, the way to the south will be open and implementation of the pro-bearish scenarios from the previous week will probably take place. Therefore, in my opinion, keeping an eye on these supports could be the key to further profitable trades. Stay tuned.
Have a profitable day and see you tomorrow.
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Anna Radomska