Analyzing Gold’s Decline: Potential Support and Recovery

Gold Forecast Video for 08.11.23 by Bruce Powers

Gold confirmed a breakdown from its small rising trend channel today as it fell through the lower trendline of the pattern and yesterday’s low of 1,977. Weakness was further confirmed on a drop below last Wednesday’s minor swing low of 1,970. Support for the day was seen at 1,957, leading to a bounce to test resistance around the 1,970 level. Given the characteristics of the breakdown it seems likely that a deeper retracement is in the works before gold is ready to resume its ascent.

Narrow Rising Channel Fails

The rising narrow parallel channel has characteristics like a rising wedge. It shows upward momentum declining in a rising consolidation pattern. Eventually, the price advance reaches exhaustion, leading to a breakdown. As with a wedge, the expectation is for a minimum move to the beginning of the pattern formation. For gold, the pattern starts at the beginning of the lower boundary line at 1,945. If reached, it would put gold near the lower edge of the next support range.

Next Key Support Starts at 1,953

The next potential support zone is from around 1,953 to 1,947, consisting of prior swing highs and weekly highs. It is where resistance was seen previously and may now show support. However, the 50-Day EMA and the 38.2% retracement are a little lower and near each other at 1,936 and 1,933, respectively.

Trading Inside Week Leads to Choppy Price Action

For the past seven days, since gold hit a trend high at 2,009, it has been trading within the week’s range from two weeks ago. The low of the range is 1,953, which correlates with the next lower price zone from current prices as noted above.

For the upside, given today’s price action it is looking like gold might continue to retrace or consolidate for the remainder of this week. We are already heading into mid-week and the retracement only got confirmed today with the rising channel breakdown. As it stands now, an advance above today’s high is short-term bullish with strength confirmed on a daily close above the high. And then further still above the two-day high of 1,993.

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