Gold Price Forecast: Consolidates Above Key Levels, Bullish Reversal Possible

Gold has found support around the 50% retracement with a low of 2,384 reached on Monday. Support is further indicated by the June 7 interim swing high of 2,388 and the 20-Day MA at 2,382. If support at this week’s low continues to hold gold is in position for a possible retest of last week’s new record high of 2,484. Monday completed a relatively narrow range day and today, Tuesday, is set to end with an inside day, representing consolidation.

Bull Reversal Above 2,412

A decisive rally above Monday’s high of 2,412 triggers a bullish reversal from key short-term support. Going forward the 20-Day MA will be in a good position to provide trend support as gold advances, if it is to do so. A slightly lower upside target is at 2,450, as it was resistance previously and stopped the advance of gold in May.

Lower Support Zone Anchored at 2,366

Alternatively, there are a couple lower price levels to watch for support if this week’s low of 2,384 is busted to the downside. The 61.8% Fibonacci retracement completes at 2,366 and an internal uptrend line may be nearby, depending on when it is reached. There is also the 50-Day MA at 2,360. Notice that the prior two retracements took the form of descending ABCD patterns.

If the current retracement takes a similar form, then the BC leg of the pattern may be next. That would be a rally up into resistance. Subsequently, the CD portion of the pattern would drop gold below this week’s low. If this scenario unfolds, it should present a clearer picture as to when the correction is complete.

Weekly Bearish Pattern

Of concern is the weekly chart. Last week’s pattern was a shooting start bearish reversal. The week ended in a weak position, in the lower quarter of the week’s trading range. A bearish signal was triggered this week. However, whether the breakdown follows through or not should provide some clarity as to its reliability. The bearish weekly signal also gives weight to the scenario noted above where a rally follows today that eventually hits resistance and turns back down. That turndown then breaks below yesterday’s low to test lower potential support areas.

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