What is the deciding factor for the next price move?
In today’s gold price forecast, I decided to share with you my insights from today’s Quick Gold Alert. Have a nice read!
Technical Picture of Gold
The first thing that catches the eye on the chart is the new all-time high at $2,805.44.
Thanks to today’s green supportive price gap ($2,778.90-$2,799.45), the bulls gained a crucial ally, which encouraged them to attack the $2,800 barrier.
Despite breaking through this key resistance and surpassing the previous high, the joy was short-lived. The buyers quickly ran out of steam, and their opponents quickly took notice. The sellers launched a counterattack, which swiftly pulled the price back toward the area of the mentioned price gap.
Before we dive into the implications of this shift and explore potential scenarios that could yield profits, I’d like to highlight some key technical events from last week that pointed toward a bullish outcome.
Firstly, despite attacks on the green gap from Jan.16, it withstood the selling pressure, triggering a rebound.
Secondly, gold futures broke above the upper line of the orange consolidation on Jan.21, activating a pro-growth scenario, which anticipates an increase to at least $2,795.40 (in short, based on the height of the mentioned consolidation).
Thirdly, thanks to the above-mentioned price action, gold bulls closed the red price gap from Dec.12, 2024, and broke above the mid-Dec. 2024 peaks, opening the way to higher prices.
Having said that, let’s return to the current price action unfolding right before our eyes.
As I mentioned earlier, the bears launched their attack and quickly pushed the price below the barrier of $2,800, invalidating the previous breakout. Thanks to this action, the price also dropped under the upper border of the blue rising wedge (marked on the 4-hour chart below), which suggests further deterioration and (at least) a test of the lower border of today’s green supportive price gap.
From this perspective, we also see that today’s upswing after the open (Asian trading hours) approached gold futures to the 127.2% Fibonacci extension (based on the Dec.12, 2024 – Dec.19, 2024 downward move), which continues to serve as the nest resistance (at around $2,807.80).
What can we expect next?
Let’s start by exploring how the bullish scenario might unfold.
It primarily relies on the mentioned green supportive price gap – if it holds up against the pressure from the sellers and the bears fail to close it before the end of the session, the bulls will likely launch another attack on the barrier of $2,800 and the above-mentioned 127.2% Fibonacci extension in the coming day(s).
However, considering all earlier negative technical factors, we also need to take into account a bearish scenario. If the sellers manage to go below the lower border of the green gap, the path to the lower line of the mentioned blue rising wedge will be open (currently at around $2,770). If this line gets breached, the bears will gain a strong upper hand and the price could start heading toward $2,754, where the 38.2% Fibonacci retracement (based on the Jan.14-Jan.27 upward move) is.
Therefore, in my opinion, the battle playing out near the lower line of the above-mentioned green supportive gap seems to be the key factor that will decide the future direction of the price, activating one of the mentioned scenarios.
Summing up, gold futures moved above $2,800 but then reversed and declined, invalidating not only the earlier breakout above this important resistance level but also the upper line of the blue rising wedge, which, together with the current position of the indicators suggests that further deterioration may be just around the corner – especially if the sellers manage to close today’s green supportive gap.
Have a profitable day and see you tomorrow.
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Anna Radomska