In today’s gold price forecast, I decided to share with you my insights from today’s Quick Gold Alert. Have a nice read!
Gold futures slipped to important support line. Will it withstand the pressure?
Technical Picture of Gold
Let’s start today’s analysis by quoting the Tuesday’s Quick Gold Alert:
(…) another downswing (…) took the price to the important support area created by the 38.2% Fibonacci retracement (based on the entire Jun.-Oct. upward move) and the barrier of $2,600.
These supports triggered a small rebound before the U.S. market open, but despite this move, the price is still trading under the previously broken Oct.10 low of $2,618.80, which suggests that as long as there is no invalidation of the breakdown under this support all upswings should be considered as nothing more than a verification of the breakdown.
Additionally, the sell signals generated by the daily indicators remain in the cards, supporting the bears and further deterioration.
Will we see such price action?
Considering last week’s breakdown under the lower border of the purple rising wedge (which served as support many times in the past), it seems that we could see a slide to around $2,683, where the size of the downward move will correspond to the height of the formation (marked with purple rectangles on the daily chart).
At this point, it is worth keeping in mind that in this area the bulls will find the first green support zone (marked with the green ellipse) created by the green supportive gap (2580.60-2587.50) from Sept.13, Sept.18 and 19 lows, the previously broken Aug. 20 peak of $2,570.40 and the 127.2% Fibonacci extension (based on the Oct.10-Oct.30 upward move).
On top of that, in this area the ABCD formation (marked with the blue rectangles) will be completed, which could encourage the sellers to take profits off the table.
From today’s point of view, we see that the situation developed in accordance with the previous pro-declining scenario and the bears reached the mentioned target during yesterday’s session.
Earlier today, the futures opened with a small pro-declining red gap ($2,578.70-$2,586.50), which triggered further deterioration and a drop below $2,570 (where the above-mentioned the ABCD formation was completed).
Thanks to this move, the futures slipped under the previously broken Aug. 20 peak, which translated into a test of the next support zone created by the lower border of the medium-term orange rising trend channel and the 50% Fibonacci retracement (based on the entire Jun.-Oct. upward move).
What’s next?
If these supports withstand the selling pressure and encourage the bulls to act, we’ll likely see an attempt to invalidate today’s breakdown under the Aug. 20 peak, the mid-Sept. lows and the green supportive gap from Sept.13 (which should also translate into an attempt to close today’s starting gap).
However, if the bulls fail here and let their opponents to finish the day under the lower border of the medium-term orange rising trend channel, it would be a strong bearish development, which will likely translate into further deterioration.
What do the bulls have on their side?
Let’s take a closer look at the 4-hour chart.
From this perspective, we se see that the futures declined not only to the above-mentioned support zone, but also tested the 61.8% Fibonacci retracement (based on the entire Aug.-Oct. upward move), which together with the current position of the 4-hour indicators suggests that reversal may be just around the corner.
Therefore, in my opinion, the outcome of today’s session will likely indicate the direction of the next (at least) very short-term move.
Summing up, gold futures extended losses, materialized the pro-declining scenario from Tuesday (reaching the ranges of two technical formations) and slipped to the lower border of the medium-term orange rising trend channel (which is the base for next support zone). Taking all the above into account, the result of the battle fought here will likely indicate the direction of the next move. Therefore, in my opinion, keeping an eye on this key support could be the key to further profitable trades.
Have a profitable day and see you tomorrow.
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Anna Radomska