Gold’s Retracement Within Uptrend: Anticipating Breakout from Falling Wedge

Gold Forecast Video for 21.06.23 by Bruce Powers

Consolidation in gold continues around support of the 100-Day EMA, as the pattern evolves into a falling wedge. This is a consolidation period where there is a downward slant to the pattern. Trendlines around the boundary of the pattern signify support and resistance. You can see how gold could slowly continue lower while staying within the boundaries of the pattern.

Gold Forms Bullish Falling Wedge

A falling wedge is considered bullish, and it needs to break out before it is confirmed. Until then, it is reflecting the potential to break to the upside. Given the current view it looks like gold could spend more time forming this consolidation pattern.

On the upside, although on a rally gold would rise above the line first, an advance above the recent swing high at 1,968 would provide a more reliable bullish signal. Then, strength would be further confirmed on a move above last week’s high of 1,971, and then a daily close above that level.

Volatility Likely to Stay Muted as Consolidation Pattern Expands

Declines should continue to be muted given that activity is happening within consolidation. Nevertheless, watch last week’s low of 1,925 for signs of support while keeping in mind potential support around the lower boundary of the pattern. If the boundary is broken to the downside, then there are a couple potential support zones identified. The most significant being around the 200-Day EMA, now at 1,895. A little higher is the 61.8% Fibonacci retracement at 1,912.

As noted previously, the expectation for gold is that it is in a retracement within a larger uptrend and that the advance of the uptrend will kick in once the retracement completes. Obviously, it is not complete yet.

Daily Close Below 100-Day EMA a Sign of Weakening

Last week there was an early session spike below the 100-Day EMA that quickly found support and ended the day back above the 100-Day line. In fact, there has not been one day yet where gold closed below the 100-Day EMA. However, that could change today as gold is on track to close below the moving average at the time of this writing. If it does, a test of the lower boundary and possible drop below it becomes more likely.

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