Sellers Remain in Charge
Price behavior indicates continued downward pressure on the price of gold after Friday’s bearish trendline break. Once a prior dynamic support line is shown as resistance, the bear trend (short, three-day pullback so far) is indicating it could continue. Since support has been seen around the 20-Day line two days in a row, a decline below it may provide an early bearish signal. Currently, the 20-Day MA is at $3,303, but the more significant price level is at Monday’s low of $3,293.
50-Day Moving Average May be Tested
A decline below Monday’s low would put gold in a position to quickly decline to potential support around the 50-Day MA (orange), now at $3,265. Notice that the two prior downswings in gold eventually found support around the 50-Day line and bounced. There is also potential support at the interim swing low of $3,245 (C), if the 50-Day line fails to reverse sentiment.
Weekly Bearish Candle
Last week’s candlestick pattern was a bearish shooting star, and the week closed very close to the low for the week. Therefore, a sustained drop below last week’s low of $3,296 will trigger the bearish pattern and it could lead to a period of more aggressive selling that’s been seen recently.
Resistance at Friday’s High
On the upside, be aware that although a rise above today’s high is short-term bullish, potential resistance remains a little higher around the trendline. Last Friday’s high of $3,375 would need to be exceeded before a clearer sign of strength than a reclaim of a trendline. However, a sustained rise above the trendline will be a sign of strength.
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