Invalidation of the breakdown vs. key resistances. What will win?
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 daily chart is today’s climb above the previously broken lower border of the orange rising trend channel. Although this is a positive sign at first sight, we could consider it a bullish development only if the buyers manage to close today’s session above this important support/resistance line.
What else can we say about today’s price action?
As you see, gold futures moved slightly above the upper border of the pink consolidation, which suggests further improvement and realization of the pro-growth scenario based on this formation.
What do I mean by that?
If the bulls manage to close today’s session above the upper line of the consolidation, we could see an increase to around $2,707, where the size of the upward move would correspond to the height of the formation. At this point, it is worth noting that in this area, gold bears have an important ally – the red gap ($2,704.90-$2,709.40) from Dec.13, 2024, which serves as a quite solid resistance.
And speaking about the resistances… before the buyers can celebrate the realization of this potential pro-growth scenario at the indicated level, they will have to fight with important obstacles along the way.
Firstly, the upper border of the consolidation and important very short-term resistances are marked on the 4-hour chart below.
Secondly, the red gap ($2,668-$2,675.80) from Dec.16, 2024.
Thirdly, the previously broken barrier of $2,700.
Having said that, let’s take a closer look at the current situation in the 4-hour chart.
From this perspective, we see that gold futures increased to a very important resistance area, which will decide the fate of the price in the following days.
What do I mean by that?
As you see on the chart, the futures climbed slightly above the previously broken lower border of the black rising trend channel (a positive sign, but we saw similar price action two times in the past, which gives mixed feelings about the credibility of this event) and reached both borders of the pink triangle and the 38.2% Fibonacci retracement (based on the entire recent downward move), which together create a solid resistance area.
Additionally, the CCI and the Stochastic Oscillator remain in their overbought areas, suggesting that the space for gains may be limited and reversal could be just around the corner (especially if they generate sell signals in the very near future).
Taking all the above into account and combining it with the upper border of the purple consolidation from the daily chart, it seems that lower prices in the coming day(s) should not surprise us – especially if the bulls do not manage to close today’s session above the mentioned consolidation.
What could happen in this case?
If the futures reverse and decline from here, we’ll likely see at least a re-test of the lower border of the orange trend channel (currently at around $2,647.30). If it is broken, the way to around $2,621 (the 61.8% Fibonacci retracement based on the Dec.19, 2024 – Jan. 2, 2025, upward move) or even green support line based on the Dec. 19, 2024, and Dec. 30, 2024 lows (currently at around 2,612.20) will likely be open.
Connecting the dots, the outcome of the battle fought here (the upper border of the purple consolidation and the mentioned resistance area marked on the 4-hour chart) will decide where the price will head next in the very near future.
Summing up, gold futures increased before the U.S. market open and reached the very short-term key resistance area (created by the upper border of the purple consolidation marked on the daily chart and the resistances seen from the 4-hour perspective), which will decide where the price will head next in the very near future.
Have a profitable day and see you tomorrow.
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Anna Radomska