In today’s gold price forecast, I decided to share with you my insights from today’s Quick Gold Alert.
Have a nice read!
November 6, 2024
Gold bears’ attack and its implications.
Technical Picture of Gold
Let’s start today’s analysis by quoting the last Quick Gold Alert:
(…) although gold futures finished Monday above this purple support line, the sellers took the price below it during Asian trading hours, which suggests that further deterioration (and at least a test of the lower line of the red consolidation) may be just around the corner.
Looking at the daily chart, we see that the situation developed in tune with the above scenario and gold futures moved sharply lower during Wednesday’s trading hours.
Thanks to this price action gold bears not only reached the mentioned downside target, but also slipped below it, approaching the previously broken Sept. 26 peak and the 50% Fibonacci retracement (based on the Oct.10-Oct.30 upward move), which together create important support zone.
Additionally, when we take a closer look at the 4-hour chart, we can notice that today’s decline took the price to the short-term green support line (based on the early-Aug. and early-Sept. lows), which (together with other supports) was strong enough to stop the bears and trigger a reversal and upward move on Oct. 10.
Therefore, in my opinion, as long as this important support area remains in the cards further strong declines are not such a sure bet. In other words, the way to the south will be open more widely if we see a successful breakdown under this important support zone.
What could happen if the bulls manage to protect it?
In this case, we’ll likely see a rebound and another attempt to invalidate the head and shoulders bearish formation, which serves as the sellers’ major ally.
However, if the bulls fail once again, their opponents will likely try to materialize Monday’s pro-bearish scenario:
(…) we can notice a potential head and shoulders bearish formation (the neckline [marked with orange] is based on the Oct. 25 and Oct. 31 lows), which if it is activated (and later the bulls do not manage to invalidate it) could take the price even to around $2,686.55, where the size of the downward move would correspond to the height of the formation [marked with orange rectangles] - assuming the break of the neckline in the area of $2,750.
In this area the bulls will find support zone (marked on the above chart with the green ellipse) created by the 61.8% Fibonacci retracement (based on the entire Oct.10-Oct. 30 upward move) and the 150% Fibonacci extension (based on the Oct. 23-Oct. 30 upward move).
Summing up, gold futures extended losses and slipped under the lower border of the red consolidation (marked on the daily chart), which triggered a decline to the previously broken Sept. 26 peak and the 50% Fibonacci retracement and the short-term green support line (based on the early-Aug. and early-Sept. lows that together create a solid support zone. In my opinion, as long as there is no successful breakdown below it the way to the south is not yet as wide open as it might seem at first glance. Therefore, keeping an eye on it could be the key to further profitable trades. Stay tuned.
Have a profitable day, and see you tomorrow.
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Anna Radomska