Tested gap, bulls’ actions and potential scenarios.
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
In yesterday’s alert, you could read the following:
(…) gold futures slipped under the previously broken lower border of the orange rising trend channel once again and closed last week below this important support. This negative development triggered further deterioration earlier today, which suggests that we’ll see a test of the green supportive gap ($2,608.10-$2,609.70) in the very near future.
From today’s point of view, we see that the situation developed in tune with yesterday’s scenario, and the bears reached the mentioned target.
As you see, the gap withstood the selling pressure and triggered a small rebound before the end of the day, which translated into further improvement earlier today. Despite this move, we should keep in mind that the futures closed Monday’s session under the previously broken lower border of the orange rising trend channel and remain not only below it (at the moment of writing these words) but also inside the pink consolidation, which means that yesterday’s comments and levels to watch remains up to date also today:
(…) the price is currently trading in a narrow range between Dec.20 intraday high and low, which means that as long as there is no breakdown under the lower border of the consolidation (based on the mentioned candle and marked with purple) another bigger move to the downside is not likely to be seen.
But what could happen if the bears manage to close one of the following sessions below it?
In this case, we’ll see (at least) a test of the Dec.18 and Dec.19 lows. If these supports are broken, the next target for the sellers will be the 78.6% Fibonacci retracement and the green support area marked on the 4-hour chart (…)
(…) Additionally, (…) in this area (marked with the green ellipse on the 4-hour chart) the size of the downward move will also correspond to the height of the above-mentioned purple triangle, which could be encouraging for the bears to reach their downside targets.
Before we summarize today’s alert, please note that the 4-hour indicators generated buy signals, which could encourage the bulls to push the price even higher later in the day.
Nevertheless, in my opinion, as long as there is no invalidation of the breakdown under the lower border of the orange channel, the lower border of the pink triangle, and the lower line of the blue rising channel and the price remains inside the pink consolidation, another bigger move is not likely to be seen, and short-lived moves in both directions should not surprise us.
Summing up, although gold futures increased before the U.S. market open gold futures’ price is still trading below the previously broken important lines (which continue to serve as the nearest key resistances), which suggests that as long as there is no daily closure above them, one more downswing and realization of the pro-bearish scenario from the previous week is likely.
Have a profitable day, and a happy New Year!
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Anna Radomska