Sharp decline, lower open and the 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:
(…) the red gap from Monday remained open. Earlier today, the bulls tried to close it once again, but failed, which together with the sell signals generated by the daily indicators suggests that another downswing could be just around the corner.
(…) What can we expect next?
Considering the current situation on the daily chart and combining it with the sell signal generated by the 4-hour Stochastic Oscillator, it seems that we’ll see one more downswing in the coming session(s).
How low could the futures go?
I believe that. The best answer to this question will be the quotes from yesterday’s alert:
(…) 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 the 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.
From today’s point of view, we see that the situation developed in tune with the pro-declining scenario from Tuesday, and gold bears tested the lower border of the orange rising trend channel during yesterday’s session.
As you can see, this important support withstood the selling pressure and triggered a quite quick rebound, which took the price not only above this line but also above both green gaps and the 50% Fibonacci retracement.
Despite this improvement, gold futures opened Thursday (Asian trading hours) with a big red pro-declining gap ($2,596.91-$2,653.30) that took the price once again under all the mentioned supports and also below the barrier of $2,600.
Although the buyers tried to close it, they failed for the fourth time in a row (all pro-bearish price gaps still remain open and serve as significant resistances), which only highlighted their weakness and translated into a comeback under the lower border of the orange channel.
Thanks to this price action, gold futures also declined under the lower border of the blue rising channel (marked on the 4-hour chart) and the Nov.26 low.
Earlier today, gold bulls triggered a comeback move, but it didn’t even reach the previously broken lower line of the blue channel, which suggests that another downswing could be just around the corner – especially when we factor in the current situation on the daily chart.
How low could the futures go?
Taking into account the above-mentioned breakdown under the blue channel, it seems that we could see a drop to around $2,587.38, where the size of the downward move would correspond to the height of the channel. At this point, it is also worth noting that in this area, there is also the 78.6% Fibonacci retracement (based on the entire mid-Nov – mid-Dec. upward move), which serves as the next support.
Summing up, although gold futures bounced off the lower border of the orange channel and closed yesterday’s session above the previously broken 50% Fibonacci retracement (marked on the daily chart), bulls’ weakness translated into a lower open and another (this time quite big) red pro-declining gap that serves as the nearest resistance. Today, they failed once again (another unsuccessful attempt to close the gap that appeared at the beginning of the day), which suggests that further deterioration and a test of the next support could be just around the corner.
Have a profitable day and see you tomorrow.
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Anna Radomska