Trend Crossroads: Gold Faces Crucial Support Levels Amid Bearish Momentum

Gold Forecast Video for 25.01.24 by Bruce Powers

Gold tested resistance around the 20-Day MA earlier in the session with a high of 2,037. That high is the third lower daily high in the past four days. Subsequently, sellers took control, and the price of gold triggered a bearish decline below the four-day low at 2,016. Sellers remain in control at the time of this writing as trading continues near the lows of the day.

Gold at Risk of Seeing a Deeper Retracement

Today’s bearish price action and signs of resistance at a key trend indicator increases the possibility that the current correction is not complete and lower prices may be seen in the future. The significance of the 20-Day MA is increased as it is also acting as a proxy for the downtrend line. Also, trend support represented by both the uptrend line and 50-Day MA has been further tested as support over the past six days. Gold is at risk of failing to continue to do so and testing lower support levels. That would change the integrity of the advance begun from the October swing low.

Key Support at Last Week’s Low of 2,002

Gold successfully tested the 50-Day MA as support several times during the progression of the uptrend until last Wednesday. The 50-Day line takes on slightly greater significance lately than it might otherwise since it has converged with the uptrend line. That strengthens the significance of the price area represented as would any key pivot. It will end up being either an area of strong support or fail to hold and lead to an important breakdown. However, a breakdown below last week’s low of 2,002 would need to occur for a clear bearish signal for the continuation of the retracement.

If Breakdown Triggers Next Lower Target is 1,987

If a breakdown of last week’s low triggers, the 78.6% Fibonacci retracement that is little lower at 1,987 probably won’t hold given that the price area acted as support last week and this week is the second test. The next lower target is the completion of a falling ABCD pattern at 1,987. Subsequently, there is a significant support zone from 1,973 to 1,964. The lower price level comes from the critical 200-Day MA. Given the significance of a breakdown of the rising trend to below the 50-Day MA and uptrend line, selling could easily get more aggressive and push prices to below the first 1,987 target zone.

For a look at all of today’s economic events, check out our economic calendar.