From consolidation to… consolidation. What’s next?
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
Looking at the daily chart, we see that gold bears pushed the futures a bit lower yesterday and managed to close the day not only under the previously broken lower border of the purple rising wedge and the upper border of the orange rising trend channel, but also slightly below the Sept.18 peak and the 38.2% Fibonacci retracement.
Negative developments?
Yes.
But did they accelerate the declines?
No.
Instead, gold bulls came back to the market and pushed the price above the Sept.18 peak and the 38.2% Fibonacci retracement once again, invalidating yesterday’s breakdowns (at the moment of writing these words the price remains above $2,630) similarly to what we already saw on Aug.22 and Aug.23.
Additionally, despite yesterday’s move under all the above-mentioned supports (and the earlier breakdown under the lower border of the orange consolidation) the sellers failed to complete the minimum downside range after leaving the formation, which suggests that their strength may have decreased somewhat.
If that is really the case and the bulls manage to finish Thursday above the Sept.18 peak and the 38.2% Fibonacci retracement, they will gain an important and supportive technical factor – an invalidation of the earlier breakdown, which would increase the probability of further growth and attack on the previously broken levels (lower and upper lines of the purple rising wedge, the upper line of the orange channel, lower border of the orange consolidation or maybe even a test of the strength of the red gap from the beginning of the month).
(…) How did this price action affect the 4-hour chart?
Before I answer this question, let’s recall the quotes from yesterday’s alert:
(…) the second support zone withstood the selling pressure, which triggered a small rebound in the following hours. Despite this move, the price didn’t even reach the previously broken first green zone (not to mention the bottom line of the pink channel), which suggests that the re-test of the nearest supports is likely (especially when we factor in a lack of buy signals generated by the 4-hour indicators).
At this point, it is worth noting that the second support area is currently intersected by the lower line of the red declining channel (based on the recent local peaks and the Sept.30 low and marked with dashed lines), which serves as an additional support – just like the short-term green support line based on the Aug.5 and Sept.4 lows (slightly below the mentioned support zone), which is one more bulls’ ally in this area.
From today’s point of view, we see that gold futures extended losses and re-tested the second support zone, the lower line of the red declining channel and the short-term green support line based on the Aug.5 and Sept.4 lows on Wednesday (as expected).
Despite this price action, all the supports withstood the selling pressure once again, which emphasizes the importance of this place for the fate of gold futures yesterday's assumption:
(…) in my opinion, only successful breakdown under all these supports will be a strong bearish signal, which will likely open further way to the south.
Therefore, as long as the price is trading above the mentioned supports a rebound from here is likely – especially when we factor in buy signals generated by the 4-hour indicators and lack of strong attack from the bears after yesterday's close below important supports.
Summing up, gold futures broke under important supports and close Wednesday below them, but the sellers didn’t extend losses earlier today. Instead, the price re-tested the nearest support zone and rebounded, which suggests that further improvement may be just around the corner – especially if the bulls manage to finish the day above the Sept.18 peak, the 38.2% Fibonacci retracement, the lower line of the purple rising wedge and the upper border of the orange rising channel. Therefore, I continue to believe that keeping an eye on the nearest support zone could be the key to further profitable trades and indicate the direction of the next short-term move.
Thank you for reading today’s gold price forecast. The full version of my analysis includes trading details, and my premium subscribers are updated regarding the trading details on a daily basis - and as you know, in the case of gold, a lot can change in one day. The regular price of my premium Quick Gold Alerts is just $49/mo. and there’s also a $1 weekly trial, so that you can conveniently check the benefits that my premium subscribers get. I encourage you to subscribe to my Quick Gold Alerts with a $1 weekly trial today.
And if you’re not yet on our free mailing list, I strongly encourage you to join it - you’ll stay up to date with our free - exclusive - analyses that will still put you ahead of 99% of investors who don’t have access to this information. Join our free gold newsletter today.
Anna Radomska