Key Levels to Watch as Gold Trades in a Rising Bearish Channel

Gold Forecast Video for 15.05.23 by Bruce Powers

Gold falls to a prior support zone and bounces intraday. It is on track to narrow its loss from earlier in the day’s session. This week is an inside week for gold as it traded within last week’s range all week. Now, watching for where it ends the week. Last week’s close was at 2,017 and it is currently trading a little below that price. A weekly close below last week’s close will be slightly bearish as it would show a close only chart weakening.

Daily Close Below 34-Day line Turns Gold More Bearish

Today’s low was 2,001 and it is the low for the week. Price was rejected off that zone with a low of 1,999 last Friday. The 78.6% Fibonacci retracement is at 2,000. Therefore, heading into next week, key near-term support is from around 2,001 to 1,999, while the 34-Day EMA is slightly lower, at 1,995, currently. A daily close below the 34-Day line turns gold decisively more bearish in the near-term as price has stayed above the line. At that point, a breakdown from the rising trend channel may be starting.

A Breakdown Confirms Target Range of 1,966 to 1,934

That trend channel is like a rising flag pattern, which is bearish if it triggers. Normally, bull flags are angled down not up. When it is angled up, it operates like a rising wedge pattern, which is also bearish. Nevertheless, until there is a trigger there is no bearish signal. The area of the 34-Day line can be used as a proxy for the uptrend line at the bottom of the rising flag as you can see how it has moved close to the uptrend line and now parallel to it. A target from the rising flag is the beginning of the formation, as it is with the rising wedge. For gold, that would be 1,934.

If a breakdown is confirmed with a daily close below the uptrend line at the bottom of the small channel, then it heads towards a support zone identified with several levels from 1,966 to the flag target of 1,934. At the top level of the range is the completion of an AB=CD pattern, which is marked on the chart. Certainly, on a flag channel breakdown, that target would be the minimum.

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