Gold Price Forecast: Faces Resistance at 20-Day MA, Bearish Outlook Builds

Gold found resistance around the 20-Day MA on Thursday with the day’s high of 2,650. It followed a lower daily low to 2,621 earlier in the session. This was the second consecutive day that the price of gold was rejected to the downside from the 20-Day MA. Since today will likely end with a lower daily low and lower high, it supports the possibility of a continuation lower. Notice that today’s low triggered a one-day bearish reversal from Wednesday’s bearish shooting star candlestick pattern.

Aggressive Selling Seen in Bearish Reversal Candle

On Monday a long red bearish engulfing pattern completed that reflects aggressive selling. Once there is one day of aggressive selling, there is a chance a second or third day. Last week’s high of 2,721 (C), established a lower swing low. Since that is one half of the definition of a downtrend, it increases the chance for a deeper correction.

And the last three days do little to counter that perspective. Resistance was seen the last three days at either the lower trend channel line or the 20-Day MA. This is bearish behavior as it follows a second breakdown of a rising parallel trend channel that triggered on Monday. Note that the short-term bearish outlook may change if there is a sustained rally above Wednesday’s high of 2,658.

Bearish Continuation Below 2,605

A bearish signal will be indicated on a drop below today’s low of 2,621 and further still on a decline below this week’s low of 2,605. The 2,605-price level is key as a drop below it triggers a continuation of the bear trend from Monday’s high. It is part of the second leg down (CD) of a falling ABCD pattern (purple). Previous support around 2,600 would then likely give way to lower prices.

The prior swing low of 2,537 (B) would then be the next lower price target zone. However, a continuation of the ABCD pattern, which seems likely, points to possible support around 2,470. That is part of a confluence zone from 2,484 to 2,470. Several indicators point to the same relatively tight price range, and it includes potential support from an uptrend line and lower declining channel line.

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