Hey everyone! I’d like to share with you the results of my hours of market observations today.
I’ve been diving into indicators, price patterns, and other technical factors—things that might seem small at first but could actually have a big impact on investor sentiment and really drive the direction of the price. My goal is for you to get the most out of today’s analysis, so I’m giving you the full premium alert and all of my thoughts. Hope you enjoy reading and, of course, I’m rooting for your profits!
Daily closure under $2,900, red gap and… their potential implications.
Technical Picture of Gold
Let’s start today’s analysis with a quick look back at the last Quick Gold Alert:
(…) the futures tested two very important resistance lines: the upper border of the medium-term orange rising trend channel and the upper line of the green rising trend channel seen from the 4-hour point of view.
(…) the combination of these key lines together with the barrier of $2,900 stopped the buyers, triggering a pullback, which invalidated the earlier breakouts.
Although this technical development doesn’t look encouraging for the bulls, we should keep in mind that its potential negative implications will be more reliable if we see daily closure under the mentioned resistances.
In my opinion, until this time, another attack on the barrier of $2,900 can’t be ruled out.
Looking at the daily chart, we see that the situation developed in tune with yesterday’s assumptions and gold bulls closed ranks after Wednesday’s alert was posted.
Thanks to this price action, the futures not only came back above the mentioned key resistance lines, but the bulls managed to hold the price above them, which resulted in the highest daily closure (at $2,893) in history!
Yup, it was a great development, but… it was below the barrier of $2,900, which means that the futures invalidated the earlier breakout above this important resistance.
How did it affect today’s price action?
Gold futures started Thursday with a small red (pro-declining) gap ($2,885.05-$2,893), which encouraged the sellers to push the price lower. Despite this move, the buyers triggered a rebound, which suggests that the battle played today may have a key impact on the future fate of the price!
What does it mean in practice?
Although the red gap remains open (at the moment of writing these words), I believe that as long as there is no successful (in other words, daily closure) invalidation of the breakout above the upper border of the medium-term orange rising trend channel another attempt to move higher can’t be ruled out.
Why this line?
Because in my opinion, the medium-term upside trend is far more important than the short- and very short-term trends.
Nevertheless, we cannot be blind to the current level of indicators… they are still oscillating in their overbought zones, suggesting that the space for gains may be limited and very great caution is highly recommended when making decisions at these levels.
Having said that, let’s take a closer look at the 4-hour chart and find out how the recent price action affected the very short-term picture.
From this perspective, the situation doesn’t look so encouraging if you are the bull.
Why?
Firstly, the price dropped under the upper border of the very short-term green rising trend channel, invalidating the earlier breakout (yup, negative sign).
Secondly, the recent upswing (the last candle on the above chart) took the price to the above-mentioned resistance line, which (sorry bulls) looks like a verification of the earlier breakdown (at least at the moment of writing these words, which means that the buyers still have a few minutes to change her pronunciation).
Thirdly, if the bulls do not push the price above the mentioned line, the candle that is being created now will become an ally of the bears. Why? Because they will receive a shooting star and add it to their allies.
Fourthly, the 4-hour indicators generated sell signals, suggesting that further deterioration may be just around the corner.
Connecting the dots, id the buyers do not close ranks just like yesterday, the strength of technical arguments may lean towards the bears and push the price lower in the next hours of the session.
Nevertheless, in my opinion, further deterioration will be more likely and reliable (at least from the very short-term point of view) if the bears manage to invalidate the earlier breakout above the upper border of the pink consolidation.
Why?
Because we saw one try to go below it and the bulls turned out to be quite active in this area, which translated into a comeback to the previously broken upper border of the upper line of the green channel.
So, what could happen, if the bulls fail there?
I believe that the best answer to this question will be the quote from yesterday’s alert:
(…) What could happen if the bulls show weakness (…)
In this case, we’ll see at least a test of the previously broken upper border of the pink consolidation. If it doesn’t manage to stop the sellers, the next downside target will be around $2,838.30 or even $2,830.21, where the lower border of the mentioned consolidation is.
Before we summarize today’s alert, please keep in mind that as long as there is no successful invalidation of the earlier breakouts above the mentioned key levels one more upswing can’t be ruled out and careful observation of the indicated levels may be crucial for further profitable decisions.
Why? Because if the bulls do not give up and turn north, overcoming the mentioned barriers, we can see a further implementation of yesterday's scenario based on pink consolidation.
As a reminder:
(…) please keep in mind that the breakout above the pink consolidation can also translate into an attack on the next psychologically important barrier of $2,900 as the minimum range of the next upward move based on the height of the mentioned formation may reach even $2,913.
Summing up, gold bulls closed yesterday’s session under the barrier of $2,900, which translated into a red pro-declining gap that started Thursday (Asian trading hours). Thanks to this price action, the futures slipped under the previously broken upper border of the very short-term green rising channel, which together with the sell signals generated by the 4-hour indicators suggest that further deterioration may be just around the corner – especially if the sellers manage to go below the previously broken upper border of the pink consolidation seen from the 4-hour perspective. Therefore, in my opinion, keeping an eye on the mentioned very important levels (and lines – yup, the upper border of the medium-term orange trend channel) could bring valuable clues about the direction of the next move.
Have a profitable day and see you tomorrow.
Anna Radomska