Analyzing Gold’s Support Zones and Anticipating an Upside Breakout

Gold Forecast Video for 06.09.23 by Bruce Powers

Gold falls below Monday’s low of 1,937 triggering a breakdown from an inside day inverted hammer candlestick pattern. Subsequently, it retraces to the 38.6% Fibonacci level at 1,926 and stalls. The price area of the 38.6% Fibonacci level includes the 34-Day EMA at 1,928. The low for the day is 1,925.50.

Weak Price Action Today Points to Lower Prices in Near Term

It looks like there is a good chance for a continuation of the retracement to test lower prices. Today’s price action shows a wide-range red candlestick pattern, indicating a change in sentiment from uncertainty during consolidation around the top of the rally, to bearish. Downward pressure remains as trading is taking place near the low of the day’s range, at the time of this writing. There has been little to no bounce since gold hit the area of the 38.6% Fibonacci level, reflecting sustained selling pressure and no signs of improving demand.

Another Test of 200-Day EMA Support at 1,910 is Possible

There are two price areas to watch for signs of support. The first is an interim price level around the 50% retracement at 1,918. It is interim as there is no confirmation of that price area with other indicators. Further down is the 61.8% Fibonacci retracement at 1,909.4, along with the 200-Day EMA at 1,909.6. Therefore, the 1,910 to 1,909 price zone is identified by two indicators. In addition, possible support represented by the lower uptrend line is not far below that price zone. Note that by the end of this week, the price represented by the trendline will match the price zone.

Expectation of an Eventual Upside Breakout

Also, there is a symmetrical triangle type pattern occurring as gold moves closer to the intersection of the two trendlines at 1,918. What this indicates is that gold has about nine more days at a maximum before it breaks through one of the two lines. An acceleration in momentum is expected once that occurs. Given that gold remains in a developing uptrend, the expectation is for an eventual resolution to the upside. Some consolidation before a continuation higher provides an opportunity for gold to prepare for an upside breakout that may be strong enough to take out the recent swing high of 1,953 relatively quickly following an upside breakout.

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