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Gold Talking Points:
- After spending late-May and early-June in consolidation, Gold prices have plunged to fresh 11-month-lows during the current five-week sell-off.
- Gold prices ran into the psychological level of 1700 last week but it’s the support a little lower, around 1673-1680, that looms large on the matter. A test below that zone leads to fresh two-year-lows.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
Gold prices have started the week with a bounce which, given the way last week went, is a bit of reprieve for bulls. Gold prices have been falling for over a month now, following the build of a rising wedge pattern in June that led to a strong and decisive bearish breakdown.
That breakdown finally started to find a bit of support last week at the psychological level of 1700, and as looked at in this week’s Technical Forecast, that can keep the door open for a bit of a bounce. The first zone of interest for that theme is already in-play, spanning from Fibonacci levels at 1723 and 1733.
Gold Two-Hour Price Chart
Chart prepared by James Stanley; Gold on Tradingview
Gold Hold Near the Lows
Taking a step back on Gold and there’s scope for further recovery, largely on the basis of how minor this bounce has been so far. This morning’s bounce has been just a 14.4% move in the bearish trend that started in June. The 38.2% retracement of that move, however, rests in the zone that runs from 1763-1771, and this seems a reasonable area to look to for lower-high resistance in bigger-picture continuation themes, if the bounce does persist.
Gold Daily Price Chart
Chart prepared by James Stanley; Gold on Tradingview
Gold Shorter-Term
I kept the technical forecast for Gold at neutral for this week, and that’s largely on the basis of the primary trend appearing to be at a pause point. A five-week sell-off is encouraging for sellers, but with price angling up to support around two-year-lows, a clean breach didn’t seem probabilistic enough to retain a bearish forecast.
But, with that said, it does appear as though there’s some counter-trend potential for this week and that can keep the door open for a move up to lower-high resistance for longer-term themes. From the four-hour chart below, I point out a couple of additional areas to look to for shorter-term themes, and there’s a level around 1739 and a zone from 1751-1753.
And, as an alternative approach – the potential for bearish breakouts does remain in the event that sellers can take-out 1695 in short-order. In that even, follow-through support shows up at the two-year-low of 1680 for short-term breakout strategies.
Gold Four-Hour Price Chart
Chart prepared by James Stanley; Gold on Tradingview
— Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
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