Pro-bearish formation, closed gap and levels to watch.
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 Quick Gold Alert, you could read the following:
(…) the price slipped under the green gap from Friday, which doesn’t look encouraging – especially when we factor in the sell signal generated by the Stochastic Oscillator.
Additionally, when we take a closer look at the above chart, we can notice a potential bearish engulfing pattern, which will be confirmed if the bears manage to finish today’s session under $2,692.90. (…)
Looking at the daily chart, we see that the situation developed in line with yesterday’s assumptions, and gold futures finished Monday’s session not only well below Friday’s green gap and the 38.2% Fibonacci retracement but also below the opening of Friday’s white candle, confirming the bearish engulfing candlestick formation and giving the sellers important reason to act.
Thanks to yesterday’s drop, the CCI also generated a sell signal, which suggests that correction of the recent upward move could be just around the corner. Nevertheless, in my opinion, such price action will be more likely and reliable if the futures finish today’s (or one of the following sessions) under the nearest support zone created by the green gap ($2,672.40-$2,679.90) from Jan.9 and the lower border of the medium-term orange trend channel.
Such price action would be a strong pro-declining signal, which could trigger a decline to (at least) around $2,650 ($2,643.50-$2,655.70) where the next support area (created by the previously broken Dec.26 peak, the 61.8% Fibonacci retracement and the Jan.7 low) is.
Are there any technical factors that could thwart bears’ pro-declining plans?
Let’s examine the 4-hour chart to find out.
From this perspective, we can see that the futures finished the day under the Jan.3 intraday peak, invalidating the earlier breakout, which triggered a drop below the upper line of the green rising channel and invalidation of the breakout above this line (another negative signal).
Despite this deterioration, gold bulls pushed the price a bit higher earlier today, but considering the daily picture and yesterday’s drop under the pink channel, it seems that the realization of the pro-declining scenario is just around the corner.
As a reminder:
(…) the sellers pushed the price under the lower border of the pink rising channel, triggering a pro-declining scenario.
What do I mean by that?
Taking all the above into account, it seems that we could see further deterioration to around $2,671.60, where the size of the downward move would correspond to the height of the above-mentioned pink channel (at this point, it is worth noting that in this area gold bulls could find support – the 50% Fibonacci retracement based on the Dec.30-Jan.10 upward move).
Finishing today’s alert, please keep in mind that the 4-hour indicators suggest that the space for declines in the very short term may be limited and rebound from the above-mentioned support area before the next bigger move to the downside should not surprise us.
Summing up, gold futures moved sharply lower on Monday, closing Friday’s green supportive gap, breaking under the 38.2% Fibonacci retracement, the Jan.3 peak, the upper line of the green channel, and creating the pro-declining bearish engulfing candlestick pattern.
Additionally, the daily Stochastic Oscillator and the CCI generated sell signals, suggesting that a bigger correction of the recent increases may be just around the corner. Nevertheless, before we see such price action, it seems that the bears will complete yesterday’s pro-declining scenario and test the strength of the nearest important supports, which, together with the current position of the 4-hour indicators, could encourage gold bulls to fight and trigger a rebound first. Stay tuned.
Have a profitable day, and see you tomorrow.
Thank you for diving into today’s gold insights. If you’d like to access even more timely updates and trading tips, consider trying our Quick Gold Alerts—a premium service designed to keep you one step ahead in the gold market. For a limited time, you can start with a free 16-day trial, giving you a risk-free way to explore the full benefits our premium subscribers rely on. Don’t miss out on staying informed and ready to act as market shifts happen. Start your free trial today!
Anna Radomska