Gold’s Retreat: Unveiling Potential Support Zones and Future Trajectory

Gold Forecast Video for 03.01.24 by Bruce Powers

Gold completed a rising ABCD pattern at last week’s high of 2,088 before encountering resistance. Subsequently, a retracement began that may have further to go. Last week ended with a bearish weekly shooting star candlestick pattern. The pattern is generally bearish but only after having been triggered. That will occur on a drop below last week’s low of 2,053.

Target Support Zone: 38.2% Fibonacci at 2,044, with Prior High at 2,048

If the weekly potentially bearish candle triggers, gold will next be targeting lower price levels starting with a price zone around the 38.2% Fibonacci retracement at 2,044. Notice that the prior swing high is close by at 2,048 (B). Together, these two indicators identify a potential support zone from 2,048 to 2,044. If the retracement continues from there the next lower target is from around 2,034 to 2,031. That second zone consists of the 20-Day MA and 50% retracement, respectively.

Well Structured Rising Trend Channel Dominates

Gold has been rising from the October 6 corrective low of 1,810 in a parallel trend channel reflecting symmetry within the volatility of the advance. There have been two legs up off the bottom and gold is currently attempting to rally the third advance from that low. It is expected that gold will eventually reach new highs in the relatively near future. Three legs up in a rally at a minimum is common and the third leg up has not yet reached a target. A minimum target, just based on price structure, is at the 127.2% Fibonacci extension of the latest bearish retracement at 2,180.

2,006 is Strong Support

Given the clarity of the price structure of the rising channel, a drop to test the lower channel line as support would be the lowest price area anticipated during the developing retracement. The 50-Day MA can be used as a proxy for the trendline as it converged with the line starting in early-December 2023. It is now at 2,006. If a retracement does continue, the characteristics and extent of the decline may be telling as to what comes afterwards. For example, a shallower pullback and recovery will be a stronger sign of strength than a deeper retracement and slow recovery.