Monday's weakness of the bulls and its consequences.
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:
(…) three pro-bearish technical factors remained in the cards:
· the red gap that started the day
· an invalidation of the earlier breakout above the purple consolidation
· an invalidation of the earlier breakout above the upper border of the blue channel
What impact did it have on today’s price action?
(…) gold futures started Monday with a third in a row red pro-declining gap ($2,668.15-$2,675.80), which encouraged the sellers to extend losses and test the next support zone (…)
If the buyers manage to hold the price above this level and close the gap, it will be a solid positive development, which will likely trigger further improvement (…) Nevertheless, (…) if the bulls show weakness and do not manage to close today’s gap, we could see one more downswing and a re-test of the strength of the green support zone marked on the 4-hour chart.
Looking at the above chart, we see that although bulls pushed the price a bit higher after yesterday’s alert was posted, the previously broken 61.8% Fibonacci retracement stopped them, luring their opponents to the trading floor.
As a result, gold futures reversed and declined, losing the chance to close the morning (Asian trading hours) gap. This show of weakness resulted in a slide not only to the above-mentioned downside target but also in a breakdown below it, which increased the probability. We’ll see a test of the next support, which you could've read about on Friday:
(…) the next target will be around $2,658 where the 78.6% Fibonacci retracement (based on the entire Nov.26 - Dec. 12 upward move marked on the 4-hour chart with green) is.
If the bears manage to break it, we could see a test of the lower border of the above-mentioned very short-term blue rising trend channel seen from the 4-hour perspective.
At this point, it is worth noting that this support is the last stop before a test of Dec.6 low of $2,635.60, the Nov. 26 low of $2,629.70, and the green supportive gap (2631-2635.80) from Nov.20. If the bulls fail there, we’ll likely see a re-test of the lower border of the medium-term orange rising trend channel.
In summary, earlier today, gold futures extended losses and dropped under the green support zone, opening the way to the lower border of the blue rising channel (marked on the 4-hour chart) or even the next support in the coming days.
Have a profitable day and see you tomorrow.
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Anna Radomska