Gold Price Forecast: Battles Resistance Around 20-Day Moving Average
Downtrend Remains Dominant
If further weakness follows today’s minor pullback the force of the downtrend could exert influence again and lead to the continuation of a developing ABCD pattern. The initial target from the pattern is 2,475 and it is where the declining measured moves are equal. Once equal, a potential pivot has been identified. However, analysis of gold’s trading history shows confluence of other indicators around the 2,475 target as well. This means it shows the potential to be a strong support zone and therefore can be considered as possibly a maximum lower target for gold if the current bearish correction continues.
Follow-Through Key Determinant
Alternative scenarios are that gold breaks nearby support levels and weakens but continues to trade above support from the November low (B) at 2,537 and then consolidates. Or it breaks out above the 20-Day MA, currently at 2,641, and heads towards a test of resistance around the top downtrend line. Five-day support is at 2,608 but it may easily be broken. A more significant potential support level is around this week’s low of 2,608 as it is a weekly low. This week will end as an inside week and therefore a drop through the bottom triggers a breakdown from an inside week.
Long-Term Bull Trend Retained
It is interesting to note that on the weekly chart (not shown) gold has traded above support of the 20-Week MA for most of time since it was reclaimed back in October 2023. There were several short dips below the line since then, but gold quickly recovered and there was never a week that closed below the 20-Week line. That could begin to change this week, but we’ll have to wait another week to find out.
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