In today’s gold price forecast, I decided to share with you my insights from today’s Quick Gold Alert. Have a nice read!
Bearish gap, whispers of the indicators and… what’s next?
Technical Picture of Gold
Let’s start today’s analysis by quoting the last Quick Gold Alert:
(…) today’s pullback approached the price to the previously broken Oct.30, 2024 peak and the barrier of $2,800, which looks like a verification of the earlier breakouts above these important resistances.
Additionally, the 4-hour indicators turned north (the Stochastic Oscillator generated a buy signal), suggesting that further improvement may be just around the corner.
Taking all the above into account, I believe that Friday’s comments and levels to watch remain up to date also today:
(…) How high could the futures go in the coming day(s)?
When we take a closer look at the chart, we see that not far from current level, there is the upper border of the medium-term orange rising trend channel (…), which serves as the nearest resistance at the moment.
Having said that, let’s check what can we infer from the 4-hour chart.
(…) If the buyers extend gains, we’ll see a re-test of the strength of the upper line of the green rising trend channel (at around $2,864.80).
If it is broken, the way to the next resistance zone (at around $2,868.17-$2,877.98) based on the 161.8% Fibonacci extension (based on the Dec.12,2024 – Dec.19, 2024 downward move) and the 127.2% Fibonacci extension (based on the entire Oct. 2024- mid. Nov. 2024 downward move) will be open.
From today’s point of view, we see that the situation developed in line with yesterday’s assumptions and gold futures moved to the north during Monday’s session, hitting a fresh all-time high of $2,872.
Thanks to this increase the buyers tested the above-mentioned resistances, which caused a small pullback before the end of the day. This price action translated into a small pro-bearish red gap ($2,857.10-$2,848.92), which started Tuesday (Asian trading hours) and triggered further deterioration during early European trading hours.
Is this the end of the bulls?
Before we answer this question together, let’s take a close look at the 4-hour chart below.
From this perspective, we see that despite the above-mentioned pullback, the overall situation in the very short term hasn’t changed much as gold futures remain inside the pink consolidation, which erased less than 50% of yesterday’s upswing.
What does it mean for the price?
As you already know from many of my previous alerts, consolidation means that until the price leaves its space, the next bigger move towards the north or south is doubtful and cannot be fully trusted.
Therefore, in my opinion, waiting on the sidelines for a breakout (or breakdown) seems to be justified from the risk/reward point of view.
So, what scenarios do we have available at the moment?
If the bulls show strength and push the price above the upper line of the consolidation, we’ll see a fresh peak and a re-test of the nearest resistance zone. To be more precise - its upper border is based on the 127.2% Fibonacci extension (based on the entire Oct. 2024- mid. Nov. 2024 downward move) at around $2,877.50.
If this resistance is broken, the buyers will likely re-test the strength of the upper border of the green rising trend channel (at around $2,880 at the moment of writing these words).
Nevertheless, before we move on to a potential bearish scenario, 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.
Will we see such price action?
It all comes down to how strong and determined the bulls are. If they can push the price through the next resistance zone, based on the Fibonacci extensions, it could be a big signal for more upside. That might bring in even more buyers, potentially leading to an attack on the next key barrier.
What could happen if the pulls disappoint and show weakness?
In this case, we'll see a reversal and a test of the lower line of the pink consolidation. If it fails to stop the sellers, we'll certainly see another test of the 2800 level pretty soon.
Before we summarize today's alert, please keep in mind that the buyers climbed above the upper line of the red pro-declining gap, which started the day, suggesting that they still have strength and aren't ready to back down without a fight.
Summing up, gold bulls turned north, climbing above the red gap (this action will turn into even more positive development if they close the session above the upper line of the formation). Despite this move, the futures are still trading inside the pink consolidating (seen from the 4-hour perspective), which means that as long as there is no breakout/breakdown another bigger technical development is not likely to be seen. Therefore, in my opinion, keeping an eye on the borders of this important formation could bring valuable clues about the direction of the next move.
Have a profitable day, and see you tomorrow.
Anna Radomska