Gold Testing Support Levels: A Look at Recent Trends and Potential Bearish Signals

Gold Forecast Video for 15.06.23 by Bruce Powers

Gold has been testing support around the 100-Day EMA for 14 days including today. Today’s low at the time of this writing was 1,940 and the 100-Day line is at 1,939. Of some concern is the several declining daily highs of the past few days. Last week the opposite was the case, as there were a series of higher daily highs as gold more specifically tested resistance of the uptrend line.

Breakdown from Pennant Targets 200-Day EMA Support

The low of the past couple of weeks and the bottom of the retracement to date is at 1,932. A daily close below that price level is bearish with gold then heading towards lower potential support areas. However, there is significant support likely to be found not too much lower.

The most significant is the 200-Day EMA, currently at 1,892. It represents the long-term trend. Back in late-March to early-February the line was tested as support with a double bottom bullish reversal pattern, and it held. That was the first test of support at the 200-Day line since price rose above the line in November of last year, after being below it for approximately 27 weeks.

Bear Pennant Forms

As gold has been consolidating in a tightening high to low price range over the past couple of weeks the activity has taken the form of a small symmetrical triangle, or bearish pennant on the chart. However, the pennant is missing a clear sharp decline that defines the pole of the pennant. By comparison, a bull pennant formed following a sharp advance off the March 8 low (2). The sharp advance is the pole, and it reflects strong demand. By contrast, the current pennant was not preceded by a sharp decline reflecting aggressive selling.

Therefore, the breakdown from the pennant, if it occurs, may not follow-through with aggressive selling. For example, the decline from the 2,082 high to the bottom and start of the pennant took 18 days, while the bull pennant pole occurred over a much shorter eight days. This shows more aggressive buying relative to the selling phase. Also, note that the prior pennant broke out on day 11 and the current pennant is now on day 11.

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