Gold Price Forecast: Rebound or Further Decline?

Fibonacci Retracement Completes

Given the completion of a minor 78.6% retracement today and the subsequent intraday bounce, a rally above today’s high of 2,659 would trigger a potential daily bullish reversal. What makes that pivot more interesting is that a trendline break and 20-Day MA breakout would also occur. When two or more indicators mark a pivot area, the subsequent breakout can sometimes lead to more aggressive buying.

Rangebound between 2,765 and 2,605

Essentially, gold continues to trade within a range between two key price levels. The direction of the breakout could lead to a continuation in whichever direction that is. At the top of the price range is last week’s high of 2,675. A sustained breakout above that price level triggers a bullish continuation of the trend starting from the November low (A) and puts gold in a position to test higher targets, around 2,750 and 2,790. The bottom of the range is at 2,605.

Downside Risks Remain

Downside risk remains nonetheless and a drop through today’s low of 2,633 would provide the first indication that sellers remain in charge. At least in the short-term as the potential for a bullish reversal remains as long as gold stays above the higher swing low 2,605. But if that low is broken to the downside the November swing low at 2,537 becomes a potential target. Price levels from the weekly chart also need to be considered given that last week ended with a bearish shooting stay candlestick pattern. It shows a tall tail and close near the lows of the range as the sellers were in control by the end of the week. A bearish weekly signal is indicated on a drop below last week’s low of 2,627.

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