Weekly Breakout Boosts Gold’s Potential to Test 200-Day EMA

Gold Forecast Video for 11.10.23 by Bruce Powers

Gold remains stalled around the 38.2% Fibonacci retracement zone (1,863) following a sharp rally Monday. Yesterday’s high was almost an exact hit of the 38.2% level, and it was followed by a slight advance to a new trend high today with a high of 1,865. Volatility has declined today, however, with gold trading in a relatively narrow range near the top of yesterday’s range. So far, today’s behavior can still be a sign of strength on a rest day.

Rally Above Today’s High Signals Bullish Continuation

A bullish signal is indicated on an advance above today’s high with gold subsequently heading towards the 50% retracement zone around 1,879. Moreover, that price area begins a potential resistance zone up to the prior swing low from August at 1,885. Higher up is a price zone from around the prior swing low at 1,893 to the 61.8% Fibonacci retracement at 1,895.

Test of 200-Day Line on Horizon

If the recent low of 1,810 is a long-term low, and there is reason to believe it is, a test of the 200-Day EMA seems likely eventually. The 200-Day line is currently at 1,904. Gold remains at risk of an ongoing correction if it stays below the 200-Day line. This long-term trend indicator informs us about the health of the uptrend. Once gold can hold above the 200-Day line and begin to move away and above the line it will be in a better position to continue to rise. That will attract new and more aggressive buyers who have been waiting for a clearer indication of the health of the trend.

Weekly Bullish Reversal Confirmed

Given yesterday’s weekly bullish breakout, the outlook for gold is improving. Last week completed a weekly hammer bullish reversal. It triggered yesterday on a rise above 1,850. Since this is a weekly signal, it has the potential to eventually test the three-week high at 1,927.

Lower Support Levels

On the downside, a drop below today’s low of 1,853 points to a deeper retracement. Yesterday’s low of 1,842 is near-term support and the end of yesterday gap up. Therefore, a decisive decline below yesterday’s low increases the chance for a gap fill. In this case, gold could fall to at least 1,835, the beginning of the gap.

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