Gold’s Bearish Signal: Key Support Zone Faces Critical Test

Gold Forecast Video for 11.08.23 by Bruce Powers

Despite a nice rally earlier in the session, gold hit resistance at a daily high of 1,930 before pulling back the rest of the day. Subsequently, a 78.6% Fibonacci retracement was completed at 1,913 as a low of 1,913 was reached as of the time of this writing. In addition, if it closes in the lower 25% or so of the day’s range (below 1,926) gold will end the day with a bearish doji inverted hammer that points to a likely bear trend continuation of the retracement. Further, given that gold is currently trading around 1,913, a daily close below yesterday’s low of 1,914.20 provides an additional piece of evidence supporting a further decline.

Support zone: 1,913 to 200-Day EMA at 1,908

There is a key support zone starting from the 78.6% retracement at 1,913 and going down to the 200-Day EMA at 1,908. That zone also includes the completion of a falling ABCD pattern at 1,909.50 where the CD leg is extended by 161.8% relative to the AB leg of the decline. Of course, the 200-Day line being a significant long-term trend indicator and it marks dynamic support for the uptrend.

Could Gold Keep Falling?

Given gold’s failed attempt to rally and subsequent weak likely close, a test of the 200-Day line as support seems very possible. If the 200-Day line does not stop the descent then the next two lower price levels where demand might pick up are minor swing low on the daily chart at 1,902, followed by the June swing low at 1,893. However, the 1,902 level is also a monthly low. That low for July is quickly followed by June’s monthly low at 1,893. Given the longer time frame a breakdown of a monthly level is potentially more significant than breaks of shorter time frame pivots.

Monthly Breakdowns Hold Greater Significance

Although a drop below the 200 line is bearish, downward momentum started up at the recent 1,987 swing high. Whether selling pressure can be sustained after breaking below key trend support remains to be seen. It is possible there is a quick drop that triggers stops before buyers jump in more aggressively and take gold back up above the 200-Day line or swing low, whichever the case may be.

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