Gold’s Precarious Position: Testing Key Support Amidst Bearish Signals

Gold Forecast Video for 13.12.23 by Bruce Powers

Gold trades inside day as it further tests support around the retracement lows of 1,976 along with support of the 78.6% Fibonacci retracement at 1,975. Further, today’s price action has traced out a bearish shooting star candlestick pattern. It shows a failed rally earlier in the session, followed by a drop to below the opening price. Gold is currently trading near the lows of the day and is on track to close in the bottom quarter of the day’s range, which is bearish. If the bearish candle triggers a breakdown on a drop below today’s low of 1,977, then the 1,976 low is at risk of being exceeded to the downside.

Bearish Continuation Possible

Given how aggressively gold has been dropping from the recent record high of 2,135, it would not be surprising to see a deeper retracement. If a bearish continuation does trigger the next lower price zone to watch for signs of support is from around 1,967 to 1,960. It consists of the 50-Day MA and a prior swing high from February 2023, respectively.

Recent Swing Low Could be at Risk

Might the most recent swing low of 1,932 also be tested as support? Certainly, if the 1,960 level is busted gold next heads towards a test of the 1,932-price area. Given the aggressiveness of the decline, at that point a drop below the swing low seems likely. Both the 61.8% Fibonacci retracement of the larger upswing completes there as well, at 1,934, and it is a monthly low.

If prices keep falling from there, next on the agenda would be the 1,915-price area. That is where a falling ABCD pattern completes. The two legs down in the decline will match at that point. First, was the decline from A to B followed by a brief rally. That same distance in price is then subtracted from the minor swing high at point C to arrive at the target for point D.

Given the significance of the 1,932-price zone, if it is approached, a quick undercut of that swing low might occur as a final shake out of weak holders. This is because downward momentum began near the recent high of 2,135 and may start to weaken if the 1,932 level is broken to the downside.

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