DiscoverGold
10 hours ago
Gold Targeting Rise to 20-Day Moving Average at 2,644
By: Bruce Powers | December 20, 2024
• Gold’s breakout above 2,626 sets the stage for test of resistance at 20-Day MA, with downside risks extending to 2,473 if bearish momentum persists.
Gold bounced on Friday to reach a high of 2,632. That put it slightly above yesterday’s high of 2,626. And it is on track to close in a strong position, in the top third of the day’s price range. That would put it in a position to test resistance around the 20-Day MA, at 2,644 currently, along with a downtrend line. Since the two lines have recently converged, they represent a potentially more significant pivot level than either alone.
Test of Prior Trend Support as Resistance
Notice that from Monday to Wednesday this week the lines were around resistance at the highs of the day. Therefore, if the bear trigger from Wednesday is to follow-through to the downside, it is possible that gold could see resistance around the 20-Day MA and then turn back down.
Lower target levels below this week’s low begin with the 78.6% retracement at 2,576, not much below this week. However, if lower prices continue the recent swing low at 2,537 may be tested as support. Looking at the developing descending trend channel, it shows an increased risk that the 2,537-price level could be busted to the downside. That would put a price zone around 2,475 to 2,473 as the next target zone below 2,537.
Bearish Persistence Could Lead to 2,575 Eventually
There are several indications pointing to that price zone. A declining ABCD pattern (purple) reaches an initial downside target at 2,475. That is where there is symmetry in price between the two legs down and therefore it could be pivot level. The 61.8% Fibonacci retracement is at 2,473. Further, the price zone was shown as both support and resistance earlier in the year, starting from the July swing high.
Rise Above 2,664 Weekly High Changes Sentiment
Despite the potential for a bearish continuation, the outlook might start to change if there is a rally above this week’s high of 2,664. That would put gold back above the 20-Day MA and trendline. It is interesting to notice that on the weekly chart (not shown) gold fell below the 20-Week MA this week but is on track to close today above it. This means that the 20-Week MA is again showing support, which is bullish on the larger time frame. Nonetheless, price action and patterns will provide clues.
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DiscoverGold
1 day ago
Gold Bearish Correction Deepens
By: Bruce Powers | December 19, 2024
• A sharp selloff sends gold lower, with bearish signals pointing to further declines as Fibonacci retracements and trend channels suggest downside potential remains.
Gold fell to a slightly lower low of 2,582 on Thursday, which followed Wednesday’s sharp decline. During yesterday’s selloff a prior interim swing low at 2,605 was busted and the bearish implications confirmed by a daily close well below that price level at 2,585. At the time of this writing, gold is trading relatively weak, in the lower half of the day’s price range. And it may end the day in a weak position, below the halfway point for the range.
Lower Target Beckon
There are several indications that gold could fall further before the correction is complete. For one, it attempted a bull breakout of a descending parallel trend channel on December 10 but quickly faltered, leading to a drop back below the top channel line.
A failed pattern has the potential to reverse sharply in the opposite direction. That may be what is happening now with gold. Since a bearish reversal occurred from the top of the channel, the bottom of the channel is an eventual possible target. This doesn’t mean that it will be reached, but it does indicate that the sellers could be in charge for a while longer.
Bearish Indications
Notice that as gold declined from the 2,726-swing high (C) it dropped back below the 20-Day MA (purple). Then, on Tuesday and Wednesday the high of the day tested the 20-Day line as resistance. It found resistance as price was rejected to the downside from the area around the 20-Day MA. This shows prior support being confirmed as resistance, and it is bearish behavior. Bearish sentiment was then confirmed today with an advance to test resistance around the bottom of a small rising trendline starting from the 2,605-swing low.
Next Target 78.6% Retracement at 2,576
The next lower potential support level is around the 78.6% retracement at 2,576. However, as noted above, if the trend channel remains valid the most recent swing low at 2,537 (B) could easily be tested once again. If that price zone fails to stop the descent, then the next lower price zone around 2,473 becomes a target. That price level is the 61.8% Fibonacci retracement for the upswing that began from the May swing low. It also includes the target for a falling ABCD pattern at 2,475.
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DiscoverGold
2 days ago
Gold Slides Below Key Support as Bearish Signals Intensify
By: Bruce Powers | December 18, 2024
• Gold dropped to 2,587 Wednesday as bearish signals emerged, with the Fed's rate cut fueling declines and support levels at 2,537 and 2,473 in focus.
Gold fell sharply on Wednesday following the U.S. Federal Reserves decision to lower interest rates by a quarter point with fewer reductions expected in 2025 than was previously estimated. The decline took gold below the recent interim swing low of 2,605 to a low for the day of 2,587, at the time of this writing. That is a bearish signal that will likely lead to lower prices for gold.
The 2,605-swing low established a higher swing low and set up the potential for a bullish continuation above the 2,721-swing high on November 25. An attempt to break out above the 2,721 level was subsequently attempted on December 12 with a slightly new high of 2,726. Sellers quickly took back control from there however, leading to today’s descent.
Close Below 2,605 Confirms Bearish Signal
A daily close below the 2,605-support level will confirm today’s bearish signal and put gold on track to test lower support levels before the correction is complete. Notice the parallel declining trend channel on the chart. There was an attempted breakout recently above the top channel line, but it failed after a couple days as gold fell back below the line last Friday.
Also, recent attempts to reclaim the 20-Day and 50-Day MAs have failed. Resistance was seen yesterday around the 20-Day line after gold traded above it for six days prior, and the 20-Day line fell below the 50-Day line on November 26, and it has not gotten back above it. These are all bearish signs that now take on greater meaning.
Decline May Test Support Around 2,537 Swing Low
It looks like there is a good chance that the 2,537-swing low will be retested as support and certainly lower prices may be hit as well. In general, once price is rejected on one side of a channel and begins to move in the other direction, an eventual hit of the opposite trendline is possible. The weekly chart held the clue for this drop as today triggered a bearish weekly shooting star candlestick pattern from last week. And it represents a failure of the earlier bull breakout noted above. Failed pattern can lead to sharp moves.
Lower Potential Support Zone Around 2,473
Below 2,537 is a 61.8% Fibonacci retracement level at 2,473 that looks to mark the next lower potential support level for gold. A falling ABCD pattern also completes close to that price level at 2,475. It would also be a good idea to watch for signs of support around the next lower trendlines, which is around the Fibonacci retracement level.
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DiscoverGold
1 week ago
Gold Bullish Signals Drive Gold Higher, Eyeing Trend Continuation
By: Bruce Powers | December 11, 2024
• Gold rallies to 2,721, testing resistance as bullish momentum builds, signaling potential for a sharp advance toward the 2,790-price target within an ABCD pattern.
Gold continued to strengthen on Wednesday as it rallied above Tuesday’s high to test resistance around the 2,721 November swing high. At the time of this writing, gold had reached a high of 2,721 for the day and it continues to trade near the top of the range. Therefore, it could reach a new high before the end of the day. The advance followed a successful test of support to the top of the down trendline that was exceeded yesterday.
Bullish Momentum Improves
Given the bullish behavior in the price of gold following last Friday’s swing low of 2,614 it is starting to look like the correction is over the uptrend can continue. Of course, additional bullish follow-through is needed to show sustainability of the advance. Today is the third day of gains since Friday and the rally has stopped at an obvious possible resistance zone.
However, it indicates a key pivot that will trigger a bullish continuation is triggered and held. Also, the possibility of a quick rally above the high followed a quick reversal back down should be considered. Particularly, since upward momentum began from the intraday bullish reversal last Friday.
Weekly Chart Confirms Upward Bias
The longer time frame weekly chart (not shown) is confirming bullish signals. An upside breakout was triggered on Monday as gold rose above the inside week pattern high at 2,657 from last week. Given the subsequent bullish reaction it looks like the market has recognized that breakout. Gold is currently on track to close strong with the week, especially if it can reclaim the swing high (B).
A daily close above that high would confirm that continuation of a developing rising ABCD pattern (green). Once the 2,721 (B) point is exceeded a bullish continuation of the pattern will be signaled. An initial upside target from the pattern is at 2,790 (D). That is right at the current trend high.
It took a little while, but now that gold’s momentum is improving along with technical bullish signals, it has the potential to see a sharp advance like what was seen in the initial leg up off the bottom in November. Next, let’s see where it ends the week and how that changes the patterns and adds clues.
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DiscoverGold
1 week ago
Gold Momentum Builds as Gold Surpasses Key Resistance Levels
By: Bruce Powers | December 10, 2024
• Gold rallies to test key resistance levels, supported by a bullish reversal and a breakout above the 50-Day MA, signaling potential upside continuation.
Gold spiked higher on Tuesday to reach a daily high of 2,695. So far, that is a test of resistance around the internal trendline. However, gold is set to close strong, near the highs of the day, which is where it is currently trading. Before it does it may reach a new high for the day. The advance showed strength as it exceeded potential resistance at the 50-Day MA, now at 2,669, and gold will likely close above that line. Today’s strength followed a bullish reversal of a failed breakdown of a bear flag pattern last Friday.
Follow-through will be a Key Indicator
Follow-through from here will be key. There is upside potential if today’s high is exceeded as it should be gold back above the trendline and further confirm a failure of the bear flag. A top purple parallel line is shown on the chart for the top of the flag. Although a sustained advance above the trendline would indicate strength, a rally above the recent swing high at 2,721 would be needed to trigger a bullish reversal of recent bearish correction.
Bullish Momentum Kicks In
Today’s bullish momentum follows a breakout of an inside week pattern that triggered on a move above 2,657 yesterday. A bullish reversal on the weekly chart would support the possibility that gold can continue to strengthen in the near-term. The 2,721-swing high is a five-week high. It seems likely that if upside momentum is sustained above today’s high, gold has a shot at testing and therefore possibly exceeding that swing high. It is worth noting that today’s advance also exceeded the 2,686-swing high from September. That provides another clue that the buyers are starting to get more aggressive.
Pullback Could Find Support at 50-Day Line
Nevertheless, further consolidation leading to greater market uncertainty could also occur. As noted, additional signs of strength will be needed if gold is to have a chance of reaching the most recent swing high. A pullback from today’s high could see support around the 50-Day MA. How gold behaves around the 50-Day line should provide clues as to strength or weakness. That line can be watched along with the recent minor swing high of 2,666.
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DiscoverGold
2 weeks ago
Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | December 7, 2024
• Following futures positions of non-commercials are as of December 3, 2024.
Gold: Currently net long 259.7k, up 9.4k.
Gold bugs were repelled at the 50-day ($2,681) for six successive sessions including the first four this week. They lost the average on November 11 and have since closed above it only once.
Earlier on October 30, gold reached a new high of $2,802, having begun to rally in June at $2,305. On the way to that peak, there were several breakouts – $2,610s, $2,540s-50s and $2,440s-50s, which can now provide support.
On November 14, the metal ticked $2,542 intraday and reversed higher. The rally since has now stalled at the 50-day. This week, it lost 0.8 percent to $2,660/ounce. The longer it takes to reclaim the average, which is now flat to slightly falling, the higher the odds of continued downside pressure. There is support at $2,610s immediately ahead.
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DiscoverGold
2 weeks ago
Gold Bear Flag Pattern Signals Potential Bearish Continuation
By: Bruce Powers | December 4, 2024
• Resistance at $2,666 and 50-Day MA challenges gold’s recovery, while bearish continuation may lead to drop below November’s swing low.
Gold has formed a developing bear flag pattern (purple) since a 2,605-swing low was established a week ago Tuesday. Notice that the pattern has encountered both the 50-Day MA (orange), now at 2,669, and the 20-Day MA (purple) at 2,635, as it developed.
Today, support was seen at 2,632, around the convergence of the lower rising parallel line of the flag formation. Given the sharp selloff following a lower swing high of 2,721 (C) last week, the expectation is for an eventual bearish continuation. Once the top of the flag is determined by a flag breakdown, a potential target can be assessed.
50-Day MA Resistance
The area to watch for potential resistance is around the 50-Day MA as a daily close above it would be a sign of strength. Since the line was successfully tested as resistance last Friday with the high of 2,666, it may again represent resistance. Also, it has the potential of being the top of the flag, as does the 2,666 high. Currently, within the flag there is a higher daily swing low at 2,622 and therefore a decline below that price level would be bearish. Earlier indications of weakness may be noticed around the lower parallel line or the 20-Day MA.
Lower Swing High Followed by Bearish Behavior
Since last week’s swing high established a lower swing high, there is the potential for a bearish continuation of a developing ABCD pattern (orange). If the bear flag triggers, the possibility of reaching lower targets will increase. The prior swing low of 2,537 combines with the 50% retracement level at 2,534. Further down is a potential support range from 2,4873 to 2,470, consisting of the 61.8% Fibonacci retracement and the target from a falling ABCD pattern, respectively.
200-Day MA Down at 2,441
The long-term trend indicator, the 200-Day MA, is a little lower at 2,441. That moving average is important for the long-term gold trend. Notice that the line was reclaimed in mid-October 2023. There were then several tests of the line as support and price reversed to the upside each time. However, the current decline presents the possibility of another test of the 200-Day line as support following a strong advance and movement up and away from the line. Given the above bearish short-term implications, the possibility of gold eventually testing support around the 200-Day line needs to be considered.
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DiscoverGold
3 weeks ago
Gold Faces Bearish Momentum After Bullish Reversal Falters
By: Bruce Powers | November 27, 2024
• Gold’s bullish reversal failed as sellers pushed prices below key support the mid-point of the day’s trading range. Bearish patterns target a confluence zone near 2,470 if the 2,605 daily low is busted.
Gold triggered a one-day bullish reversal of a hammer candlestick pattern on Wednesday. Enthusiasm from the bulls was quickly swatted however, around at the 20-Day MA. Following the day’s high of 2,658, sellers took back control and pushed price down below the half point (2,643) of the day’s trading range. At the time of this writing, gold continues to show weakness as it is trading in the lower half of the day’s trading range. If closes below 2,643, assuming there is not a new high or low for today, then gold should be ready to proceed lower.
Price Rejected at 20-Day MA – Bearish
The 20-Day MA line recently indicated dynamic support for the uptrend, and it was successfully tested today as resistance as the price of gold was rejected to the downside around the line. Also, the same could be said about the relationship to the rising internal trendline. It represented an area of resistance today after previously showing support for the uptrend. This is bearish price behavior typically seen in the development of a downtrend.
Friday’s Plunge May be an Omen
Last Friday’s sharp one-day bearish engulfing reversal day shows aggressive selling, and it mimics the wide range red candle from November 6. That occurred as the decline from the 2,790-record high accelerated. It may have been a warning sign that a bearish continuation may be coming as last week’s high is a lower swing high relative to the record high. If the bears retain control, then the November swing low at 2,537 would be at risk of failing to sustain support.
Falling ABCD Pattern Formed
The bearish pattern that may be developing is a falling ABCD pattern. It is nothing more than a way to calculate two sequential measured moves that are connected by a pullback. Initial targets from the pattern occur where the price change seen in the CD leg of the pattern matches the change in the first AB leg. The first target is where there is symmetry in price between the two swings. Extended targets can also be calculated, and they are based on Fibonacci and other ratios. Nonetheless, although the analysis can provide potential targets, ideally there is confluence with other indicators that point to a similar price target.
The calculation of the purple ABCD pattern on the chart indicates a potential target of 2,470. That level is strengthened as a target because it is also identified in several other ways. Fibonacci ratio analysis shows the 61.8% retracement at 2,473, while there are two trendlines nearby as well, one rising and the other falling. Further, resistance from an interim swing high in July is at 2,484.
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BottomBounce
3 weeks ago
Silver is finally coming to life after months of sideways trading and being overshadowed by gold’s record run of new highs, but with the gray metal now trading above $30, one hidden source of demand could propel silver to a new all-time high in the not-too-distant future.
As reported by The Jerusalem Post, silver’s uses in consumer electronics and renewable energy have been extensively covered, but its applications within the secretive realms of military and aerospace technology are less discussed.
“Recent analysis suggests that military usage of silver may be substantially greater than any other industry category, including electronics, solar panels, and investment demand combined,” the report said. “This information, brought to light by silver market experts, raises significant questions about the transparency of silver demand data and the potential impact on future silver prices.”
While central banks and large asset managers regularly report on silver inventories, purchases, and sales, the report noted that “five U.S. government agencies, including the Department of Defense, Department of Energy, Department of Interior, and the U.S. Geological Survey, have collectively stopped reporting on silver inventories since 1995-1996.”
“The military’s appetite for silver is well documented and was notable during the Manhattan Project, America’s successful attempt at building the first operational nuclear weapon,” the report noted. “In complete secrecy, the United States removed 430 million ounces of silver from the West Point Bullion Depository to turn 1,000-ounce silver bars into cylindrical billets and wound them onto magnetic coils.”
Due to the secrecy of these operations and the assumption that other such developments have occurred under the guise of “black projects,” many in the precious metals community have grown wary of government-sourced data regarding the usage of the gray metal.
This includes its application in creating rockets and missiles, bombs and shells, fighter jets, satellites, tanks and submarines, torpedoes, night vision goggles, communication devices, radar systems, space technology, and nuclear technology.
As often cited by Andy Schectman, a renowned expert in the precious metals market and a regular interviewee with Kitco News, there are 500 ounces of silver in the tip of every tomahawk cruise missile, but the total amount used by the DoD is never reported, suggesting that demand for defense applications could be far higher than what’s assumed.
“The hidden military demand for silver could potentially outpace industrial applications as we progress through time and technology advances,” the report said. “Escalating geopolitical tensions and potential conflicts may drive this increase, making silver's role in military applications increasingly significant. This shift could have a substantial impact on the overall silver market, potentially influencing prices and supply dynamics.”
Some of the properties of silver that make it particularly appealing for military uses include its conductivity, antimicrobial properties, corrosion resistance, reflectivity, and heat conductivity, they noted.
“It is important to note that the military's demand for silver is classified, and there is limited public information available on the specific applications of silver in military equipment,” they added. “However, the properties listed above are likely to be among the most important factors driving the military's demand for silver.”
When combined with the known industrial uses – which include solar energy and photovoltaics, medical applications, photography, soldering and brazing alloys, battery technology, semiconductors, touch screens, and water purification – analysts argue that the price of silver could rise meaningfully in the years to come as the available supply gets absorbed by the growing number of use cases.
“Industrial uses account for more than half of annual silver demand worldwide over the last five years,” they noted. “The biggest consumers for industrial applications include the US, Canada, China, India, Japan, South Korea, Germany, and Russia.”
With the U.S. heavily reliant on silver imports, importing 6,500 tons of silver in 2021 and currently getting 79% of its silver from outside sources – including 47% from Mexico and 23% from Canada between 2017 and 2020 – many see it as suspect that silver was “conspicuously absent from official critical materials lists published by the U.S. Department of Energy and the U.S. Geological Survey in 2022,” the report noted.
“Neither silver nor gold made the cut,” they added. “This absence has sparked debate, as silver’s strategic importance continues to grow across multiple industries, with demand surging globally.”
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“With silver’s critical applications and growing industrial demand, many experts question whether its exclusion might warrant a reassessment,” the report said.
Indeed, this topic has become increasingly prominent in recent months as multiple countries have moved to label silver as a strategically important metal.
As reported previously by Kitco News, a draft copy of Russia’s federal budget indicates that the Russian government is looking to expand its holdings to include silver and platinum group metals.
“The formation of a reserve of refined precious metals as part of the State Fund of Russia will help ensure a balanced federal budget and stable economic development, as well as meet the industrial needs of the Russian Federation in the event of an emergency,” the Ministry of Finance was quoted in an article by Interfax, translated to English from Russian.
According to a report from Chinese media, “This is also the first time that Russia has explicitly mentioned silver as one of its reserve assets in its budget plan, indicating that silver is beginning to occupy an important position in Russia’s strategic resource reserve planning… As an energy powerhouse, Russia has a significant impact on world resource prices. Given the current turbulent international situation and stronger expectations for inflation in the future, other countries may also follow suit, which will undoubtedly generate strong demand for precious metals.”
The report added that while “silver, platinum, and palladium have remained severely undervalued in historical periods,” and “although the short-term impact on the market is not significant, from a long-term perspective of three to five years, these severely undervalued assets happen to have more investment value.”
And regarding the ongoing BRICS summit and reports indicating that the bloc plans to launch BRICS pay this coming Thursday, the Chinese media report said, “If this new payment system is linked to assets such as gold and silver, it will increase the monetary attributes of these precious metal assets, thereby also driving up the prices of precious metals such as silver.”
“One of the reasons Russia is now deploying reserves to metals like silver, platinum, and palladium is that these all have military applications,” wrote X user Weimar Silver Pilgrim. “It’s technically unknown, but most missiles are said to contain 10-20 oz of silver apiece.”
“In a STUNNING move, Russia's central bank has just become the 1st in recent times to announce #silver purchases,” noted X user Make Gold Great Again. “With only 3 oz of above ground #silver per human, other central banks better hurry before this #SilverSqueeze trend goes VIRAL AND STOCKS RUN OUT. Overheard by one uber-chic bank Chairman: ‘Silver is THE must-have central bank accessory this fall.’”
“Been saying BRICS/East has a very different historical relationship with silver than the West.
And now, Russia announced plans for silver,” added X user Graddhy. “Silver´s journey to become a part of the new coming global monetary system has now started, and it will drive the 3rd bull move.”
Both China and India have also been making strategic moves relating to silver, in what some have suggested is a calculated move by the two largest countries by population to drain the West of its silver reserves in response to years of price suppression, with many pointing to silver’s use in military applications as the impetus behind U.S. efforts to keep its price at lower levels.
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As for the implications for the silver market, the report suggested that “The combination of significant military demand and diverse industrial applications could have profound implications for the silver market.”
“With substantial demand from both military and industrial sectors, the silver market may be tighter than previously thought,” they said. “ As awareness of total demand grows, it could drive silver prices higher. Silver's strategic importance in military and industrial applications may lead to increased government interest in securing supplies. And Questions arise about the accuracy and completeness of official silver demand data.”
“The true strategic importance of silver in military and industrial applications may be far greater than publicly acknowledged, making it a critical resource for national security, technological advancement, and industrial growth,” the report concluded. “The interplay between military demand, industrial applications, and investment interest will likely shape the future of the silver market, potentially leading to a significant revaluation of this versatile and indispensable metal.” https://www.kitco.com/news/article/2024-10-22/silvers-secret-military-demand-hidden-force-driving-price-growth#google_vignette $GLD
DiscoverGold
3 weeks ago
Gold Targets Lower Levels Amid Bearish Signals
By: Bruce Powers | November 26, 2024
• Gold’s correction deepens as bearish patterns dominate, targeting 2,470 where indicators converge, if weakness persists.
Gold fell back below a lower rising channel line on Monday and then stayed below it today, Tuesday. It reached a low of 2,605 following a drop below yesterday’s low before finding support. That low completed a 61.8% Fibonacci retracement at 2,607.
This puts the precious metal in a bearish position following a sharp rally last week. The five-day counter-trend advance ended on Friday with gold in a strong position, above a minor interim swing high of 2,710. Nonetheless, the rally ended on Monday following a slight new high of 2,721. Sellers took back control from there, leading to an enthusiastic drop.
Drops Below Key Levels is Bearish
Although last week’s rally was persistent and saw the price of gold reclaim a rising trendline and two moving average lines, Monday’s sharp drop to a five-day low and weak close negated any bullish indications that may have occurred. For example, potential resistance on the way up was quickly overcome as gold reclaimed a rising channel line, the 50-Day line (orange), now at 2,666, and the 20-Day MA (purple), currently at 2,662, one day at a time.
Those lines represent key potential resistance areas currently, as the correction sets up for a continuation lower. In addition to a new daily close below the moving averages and trend channel, notice that the 20-Day MA is starting to cross below 50-Day MA.
Falling ABCD Pattern Points to 2,470
Since Monday generated a lower swing high, a descending ABCD pattern has been added to the chart in case the correction evolves to a new swing low. Certainly, given yesterday’s bearish close and again today, below the rising trendline, rallies may be met with resistance that leads to lower prices.
The initial target from the pattern, where there is 100% symmetry in the price change between the two falling swings, AB and CD, is at 2,470. Since that price level coincides with both a 61.8% Fibonacci level at 2,473 and a previous support and resistance zone, it becomes a lower target. Further, an uptrend line also goes through that price area and should be watched for signs of support if gold does continue to weaken.
Descending Channel May Lead to Decline Below 2,537
A declining parallel trend channel is shown on the chart by taking the top trendline and making a parallel level to touch the recent swing low at 2,537. It can provide a guide as gold progresses. For example, resistance can be anticipated at or below the top channel line. Additionally, if gold gets above that line and stays above it, demand would be improving rather than declining. The bearish case would be retained if gold stayed below the top downtrend line.
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DiscoverGold
4 weeks ago
Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | November 23, 2024
• Following futures positions of non-commercials are as of November 19, 2024.
Gold: Currently net long 234.4k, down 2.1k.
Four weeks ago, after rallying in six of seven weeks, a gravestone doji showed up on the weekly. Gold then dropped the next couple of weeks. Last Thursday, it ticked $2,542 intraday, and that generated buying interest.
Earlier, on October 30, gold reached a new high of $2,802, having begun to rally in June at $2,305. On the way to that peak, there were several breakouts – $2,610s, $2,540s-50s and $2,440s-50s.
Last Thursday’s defense of $2,540s-50s laid the foundation for this week’s 5.5-percent jump to $2,712/ounce. More gains are likely ahead, with immediate resistance at $2,740s, which was decisively breached on the 6th.
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DiscoverGold
4 weeks ago
NY Gold Futures »» Weekly Summary Analysis
By: Marty Armstrong | November 23, 2024
NY Gold Futures closed today at 27122 and is trading up about 30% for the year from last year's settlement of 20718. As of now, this market has been rising for 12 months going into November suggesting that this has been a bull market trend on the monthly time level which has been confirmed by electing all of our model's long-term Bullish Reversals from the key low. As we stand right now, this market has made a new low breaking beneath the previous month's low reaching thus far 25415 yet it is trading below last month's close of 27493.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Gold Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2022 and 2015. The Last turning point on the ECM cycle high to line up with this market was 2020 and 2011 and 1996.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The NY Gold Futures has continued to make new historical highs over the course of the rally from 2015 moving into 2024. However, this last portion of the rally has taken place over 9 years from the last important low formed during 2015. Prominently, we have elected four Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Gold Futures, this market remains moderately bullish currently with underlying support beginning at 26882 and overhead resistance forming above at 27127. The market is trading closer to the resistance level at this time. An opening above this level in the next session will imply that a bounce is unfolding.
On the weekly level, the last important high was established the week of October 28th at 28018, which was up 21 weeks from the low made back during the week of June 3rd. We have been generally trading up for the past week from the low of the week of November 11th, which has been a move of 6.964%. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a weak posture. Immediately, this decline from the last high established the week of October 28th has been important, closing sharply lower as well. Before, this recent rally exceeded the previous high of 27087 made back during the week of September 23rd. That high was likewise part of a bullish trend making higher highs over the week of August 19th. This immediate decline has thus far held the previous low formed at 23042 made the week of June 3rd. Only a break of that low would signal a technical reversal of fortune and of course we must watch the Bearish Reversals. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action as well as trend, long-term trend, and cyclical strength. Looking at this from a wider perspective, this market has been trading up for the past 6 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2020 while the last low formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2023 and thus we have a divergence warning that this market is starting to run out of strength on the upside.
Interestingly, the NY Gold Futures has been in a bullish phase for the past 23 months since the low established back in November 2022.
Critical support still underlies this market at 23260 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Nevertheless, the market is trading below last month's low warning of weakness at this time.
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4 weeks ago
Gold Buyers Hold Ground as Gold Tests Critical Price Levels
By: Bruce Powers | November 21, 2024
• Gold climbed above the 50-Day MA to $2,674 but faces key resistance levels, with potential consolidation or bearish pullback if strength wanes.
Gold busted through the 50-Day MA on Thursday, reaching a high of 2,674 before stalling the ascent. That high was around potential resistance of the 20-Day MA at 2,677. A daily close above the 50-Day line at 2,661 will indicate greater strength than a close below it. The 20-Day line may continue to act as resistance but there are also a couple identified price levels a little higher at 2,686 and 2,692.
If gold can continue to rally, a daily close above the 20-Day line would provide the next indication of strength, followed by a daily close above 2,692. Until there is a daily close above last week’s high of 2,686, however, the expectation remains for an eventual bearish pullback once significant resistance is encountered.
Testing Resistance Around 20-Day MA
The 20-Day MA had done a good job of defining trend support before the breakdown, since it was reclaimed on August 8. Notice that last week’s breakdown fell through the 20-Day MA at the same time as the internal uptrend line was broken to the downside. Further weakness was indicated on the drop below the 50-Day MA and then the next lower uptrend line. Therefore, a pullback looks likely once prior support levels are tested as resistance. That could occur at the levels noted above, including the 2,710-swing high. For now, the buyers remain in charge.
Near-term Support at 2,648
A decline below today’s high of 2,648 signal weakness and the possibility of a deeper pullback. The prior swing low, also a monthly low, looks to be the first key support level that may be tested on the way down. Both the low from Wednesday at 2,619 and from Tuesday at 2,610 can also be watched for signs of further weakness or potential support that is above the swing low.
Inside Week Likely
Gold will likely end this week with an inside week pattern. Until gold either drops through the bottom of the week at 2,564 or the top, currently at 2,674 (week not over), it will remain inside the week’s range and therefore choppy trading and consolidation on the shorter daily time frame may dominate for a little while. As noted previously, this week’s low bounced right off a test of the support at the 20-Week MA, while last week’s low closed at support of the moving average last week after a minor dip below the line.
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1 month ago
Gold Recovery Eyes 50-Day MA Amid Bullish Momentum
By: Bruce Powers | November 19, 2024
• Gold continues its recovery, heading to test resistance near the 50-Day MA, with a confluence zone higher between 2,684 and 2,692.
Gold made further progress on Tuesday towards a test of resistance around the 50-Day MA, as it broke above Monday’s high and will likely close above it. The high for the day so far is 2,639 and the 50-Day line is at 2,656. Today’s advance also reclaimed the uptrend line and gold may close above the line, which would provide another sign of strength, although minor. Gold could have seen signs of resistance around the line but instead it didn’t look like it mattered as the day’s high of 2,639 was a little above the line.
Counter-Trend Rally Advances
It looks like gold completed a swing low with last week’s low of 2,537. A bullish reversal confirmed with yesterday’s strong advance. The swing low was around the 50% retracement and a prior top. Gold completed a 253 point or 9.1% correction at the low. That’s the biggest drop on a percentage basis since the May 2023 correction.
Even if the low is set for the correction, that doesn’t mean gold goes right back up to new highs. Of course it could, but the more likely scenario looks to be a rally of some degree to test prior support levels as resistance levels. Once resistance is found there will be a pullback and another attempt to reclaim the price level, or a reversal that falls to retest support levels.
Confluence Leaves Clues
One of the reasons that confluence is looked for in technical analysis is that it helps identify potentially stronger levels of support or resistance. Confluence is when two or more (preferred) price levels are identified by analysis near each other. This seems to act like a magnet for price sometimes. For gold, the price range from the confluence of various indicators highlights 2,684 to 2,692. There is the 20-Day MA at 2,684, a prior swing high at 2,686, and the 61.8% Fibonacci retracement at 2,692. If that price zone does act like a magnet, then gold will reclaim the 50-Day MA on the way up.
As for the bullish case for gold beyond the 20-Day MA, it first needs to close above the 20-Day line. Until then, the expectation is for some time to go by first, starting the current rally and test of possible resistance.
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1 month ago
Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | November 16, 2024
• Following futures positions of non-commercials are as of November 12, 2024.
Gold: Currently net long 236.5k, down 18.9k.
The week began by gold slicing through its 50-day on Monday. This was then followed by four more sessions of selling, ending the week down 4.6 percent to $2,570/ounce.
A couple of weeks ago, after rallying in six of seven weeks, a gravestone doji showed up on the weekly. Since then, the metal has dropped back-to-back. On October 30, gold reached a new high of $2,802. On the way to that peak, there were several breakouts – $2,610s eight weeks ago, $2,540s-50s nine weeks ago and $2,440s-50s in August.
Gold bugs can take solace in the fact that $2,540s-50s remains intact, with Thursday’s intraday drop to $2,542 attracting buying interest. The daily has gotten oversold, so a rally is possible. Else, bears will be eyeing $2,440s-50s, with the 200-day at $2,409.
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1 month ago
NY Gold Futures »» Weekly Summary Analysis
By: Marty Armstrong | November 16, 2024
NY Gold Futures closed today at 25701 and is trading up about 24% for the year from last year's settlement of 20718. At present, this market has been rising for 12 months going into November suggesting that this has been a bull market trend on the monthly time level which has been confirmed by electing all of our model's long-term Bullish Reversals from the key low. As we stand right now, this market has made a new low breaking beneath the previous month's low reaching thus far 25415 while it's even trading beneath last month's low of 26188.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Gold Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2022 and 2015. The Last turning point on the ECM cycle high to line up with this market was 2020 and 2011 and 1996.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The NY Gold Futures has continued to make new historical highs over the course of the rally from 2015 moving into 2024. However, this last portion of the rally has taken place over 9 years from the last important low formed during 2015. Clearly, we have elected four Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
The perspective using the indicating ranges on the Daily level in the NY Gold Futures, this market remains in a bearish position at this time with the overhead resistance beginning at 25957.
On the weekly level, the last important high was established the week of October 28th at 28018, which was up 21 weeks from the low made back during the week of June 3rd. Afterwards, the market bounced for 21 weeks reaching a high during the week of October 28th at 28018. Since that high, we have been generally trading down for the past 2 weeks, which has been a significant move of 9.290% in a reactionary type decline. Nonetheless, the market still has not penetrated that previous low of 23042 as it has fallen back reaching only 25415 which still remains 10.29% above the former low.
When we look deeply into the underlying tone of this immediate market, we see it is cautiously starting to weaken since the previous high at 5074 made 1926 weeks . Immediately, this decline from the last high established the week of October 28th has been important, closing sharply lower as well. Before, this recent rally exceeded the previous high of 27087 made back during the week of September 23rd. That high was likewise part of a bullish trend making higher highs over the week of August 19th. This immediate decline has thus far held the previous low formed at 23042 made the week of June 3rd. Only a break of that low would signal a technical reversal of fortune and of course we must watch the Bearish Reversals. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action. From a pointed viewpoint, this market has been trading down for the past 2 weeks and it finished in a weak position right now warning we need to pay attention.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2020 while the last low formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2023 and thus we have a divergence warning that this market is starting to run out of strength on the upside.
Interestingly, the NY Gold Futures has been in a bullish phase for the past 23 months since the low established back in November 2022.
Critical support still underlies this market at 23260 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Nevertheless, the market is trading below last month's low warning of weakness at this time.
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DiscoverGold
1 month ago
Gold Hold Support That Could Lead to a Bounce
By: Bruce Powers | November 15, 2024
• After testing support near 2,532, gold eyes resistance at 2,619 while contending with the impact of significant technical breakdowns from earlier this week.
Gold traded inside day on Friday, with a high of 2,581 and a low of 2,554. That range is contained with the price range from Thursday. Today’s price action represents a rest following the successful test of support yesterday. Yesterday ended with a bullish hammer candlestick pattern. However, the pattern needs a trigger to be valid and that would happen on a rally above Thursday’s high of 2,581.
Support Holds Around Prior High
Support was seen yesterday around prior resistance at the August high of 2,532 and a 50% retracement level at 2,534. Also, notice that an extended bottom channel line from a prior bull flag formation also identifies possible support around yesterday’s lows. So, there is some technical evidence pointing to a possible bottom that could at least lead to a bounce. But first an advance above yesterday’s high is needed.
Breakdown of Rising Channel May Take Time to Recover
The current correction did some technical damage on the way down that may need a little time to be fully resolved. There was a decisive decline below the 50-Day MA, internal uptrend line, and a prior daily swing low that is also a monthly low. It was the first time in nine months that a prior monthly low had been broken to the downside. Moreover, the drop through the trendline triggered a breakdown of a rising parallel trend channel.
The channel represented some degree of symmetry and now that symmetry has been broken. It also improves the chance that gold may eventually test support around the lower rising uptrend line. That would be a natural progression of price following such a clear channel break. The price represented by the line would depend on when it was reached.
Bullish Reversal Above 2,619
A bullish reversal from yesterday’s lows has gold heading up into potential resistance at the prior swing low of 2,600, then Thursday’s high at 2,619. Thursday’s high can be used as a rough proxy for the trendline price for now. Then there is the 50-Day MA at 2,652, currently. Given the potential significance of the breakdowns, it would not be surprising to see a rally into resistance, to be followed by a drop that tests the week’s lows and possibly breaks below it. That scenario may start to change on a daily close above the 50-Day MA.
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1 month ago
Gold Bullish Hammer Pattern Hints at Potential Recovery
By: Bruce Powers | November 14, 2024
• After reaching a new trend low, gold bounced back, forming a bullish pattern that may signal a bottom if support at 2,537 holds.
Gold looks to be trying to establish a bottom as it fell to a new trend low of 2,537 on Thursday before buyers took back control and generated a strong bounce. This puts gold on track to end the day forming a bullish hammer candlestick pattern. Support was seen in an area previously discussed around the August high of 2,532 and the 50% retracement level at 2,534.
Also, notice that today’s low was near the lower extended trendline from an earlier bull flag formation. In other words, today’s low is a logical area to find resistance that may lead to a sustained bullish reversal
Bullish Reversal Indicated Above 2,681
A bullish reversal will be triggered on a decisive rally above today’s high of 2,681, at the time of this writing. Some technical damage was done during the current decline as support failed first at the 20-Day MA, then the 50-Day MA failed. That was followed by a monthly bearish reversal of October’s price range on a drop below the daily swing low of 2,602, which was also the monthly low.
Those indicators all show potential resistance levels on the way up, assuming today’s low is sustained. If it is not and today’s low is broken to the downside, then crude oil looks likely to approach a possible support zone from 2,484 to 2,473. The top level is a prior resistance top, and it is followed by the 61.8% Fibonacci retracement level.
Brief Dip Below 20-Week Moving Average
It is also interesting to note that the drop today briefly put the price of crude oil below the 20-Week MA (not shown), which is at 2,556. The 20-Week MA maintained support almost 100% of the time since it was reclaimed during the week of October 16. It provides additional evidence for a potential low today, at least on a temporary basis. And it has proven to be a viable trend indicator and should continue to do so. This means that a drop below today’s low will also further confirm a breakdown of the long-term weekly moving average.
Rise Above 2,619 Needed
Crude oil needs to rally above and stay above Wednesday’s high of 2,619 to have a chance at going higher. Resistance around the internal uptrend will also need to be watched as it is currently around yesterday’s high. That trendline should provide clues as it is also the bottom support line for a rising parallel trend channel. The channel shows symmetry within the uptrend. That symmetry was broken on the drop below the lower line, and the next lower trendline is down a bit on the way to the 200-Day MA at 2,398.
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1 month ago
Gold Sinks to New Low, Bearish Trend Gains Momentum
By: Bruce Powers | November 13, 2024
• Gold continues its downtrend, breaking through major support levels, with key price levels of 2,534 and 2,484 in focus as selling pressure remains high.
Selling again dominated trading in gold on Wednesday as it fell to a new trend low of 2,575. Also, it continues to trade near the lows of the day at the time of this writing and may fall further before the end of the day. The bearish correction saw gold drop through the 50-Day MA on Monday, an uptrend line and monthly low at 2,602 on Tuesday, and reach a new low today. Downward momentum has been steady with lower prices likely. A daily close below the prior trend low of 2,590 will further confirm the bear trend.
Targets 50% Retracement at 2,534
Indications are that gold is heading towards a test of support around the 50% retracement at 2,534 and prior resistance at 2,532. The lower price was also the highest traded price for August. Also, 2,532 begins a price range down to approximately 2,484. Support might be seen anywhere within that range. Subsequently, the next lower target looks to be a range from 2,484 to 2,473. The first price level is a prior trend high from July, followed by the 61.8% Fibonacci retracement at 2,473.
Monthly Bearish Reversal Triggered
Following a break below the October low yesterday, natural gas confirmed the breakdown by ending the day below the monthly low. The monthly trend of higher monthly highs and higher lows has persisted for eight months until now. This is a bearish sign on the larger time frame indicating further selling pressure for the precious metal.
Downtrend Progresses
Notice that resistance today was seen at a high of 2,619, a clear test of resistance at the internal trendline. The line was previously representing support but since the drop below the line this week, it now represents potential resistance. And it acted as an area of resistance today as gold turned back down once it was hit. In a downtrend, once support is broken and then subsequently successfully tested as resistance, the decline is ready to proceed.
That is what we see today. Since the close for today will likely occur in the lower quarter of the day’s price range and below yesterday’s low of 2,590, sellers remain clearly in charge. So, the next lower target zone is looking more likely to be reached before this correction is over.
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1 month ago
Gold Decline Deepens, Eyes Key Support Levels
By: Bruce Powers | November 12, 2024
• Gold's bearish trend deepens as it breaks key support levels, signaling potential for an extended correction to the 2,532 zone.
Gold continued its bearish retracement on Tuesday, with a new low of 2,590 before it encountered at least short-term support. Two key price indicators were broken on the way down, the internal uptrend line and a prior swing low, which is also a monthly low.
Gold looks like it will be closing weak, in the red and below the trendline. A daily close below the line improves the chance for an eventual retracement down to the previous breakout level around 2,532. Also, a daily close below the monthly low 2,602 would be bearish.
Second Week of Correction
A new record high of 2,790 for gold was reached two weeks ago. It was quickly followed by a pullback that continues. The weekly pattern was the giveaway. That week closed as a bearish reversal doji shooting star (not shown) and a bearish signal triggered last week. This week is the second week down and it shows no sign of reversing.
Gold is in a waterfall type decline that could certainly test lower prices before it is done. Bearish sentiment was recently reflected in the 20-Day MA recently crossing below the 50-Day after being above it since July 3. Moreover, a daily close below the 2,602 monthly lows may prolong the correction.
Monthly Price Levels
The monthly price patterns have significance as they impact on the shorter time frames. Today is the first instance in nine months of a prior month’s low being violated. Starting in March, gold progressed with a series of higher monthly lows and higher monthly highs, largely. That pattern was violated today and if the breakdown continues to be confirmed it could lead to a deeper and longer correction in the price of gold.
Lower Targets?
The 2,532-price zone has a good chance of being reached if downward pressure in the price of gold continues. There is also an interim price zone to watch around 2,557 to 2,551, consisting of the 20-Week MA and the 127.2% extended target for an intraday falling ABCD pattern. The 20-Week MA is a potentially significant support area as it last marked support in early-August. It has largely seen gold traded above it since October 2023.
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1 month ago
Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | November 9, 2024
• Following futures positions of non-commercials are as of November 5, 2024.
Gold: Currently net long 255.3k, down 23.3k.
Last week, after rallying in six of seven weeks, a gravestone doji showed up on the weekly. It was a sign of exhaustion, and the metal gave back two percent this week to $2,695/ounce. From gold bugs’ perspective, the good thing is that Thursday’s low of $2,650 was bought, with the 50-day ($2,662) breached intraday but defended by close.
On the daily, it is possible gold rallies a bit more, but it remains way overbought on the weekly.
Before this week’s decline, the yellow metal rallied relentlessly from June when it ticked $2,305. Since then, there have been several breakouts – $2,610s seven weeks ago, $2,540s-50s eight weeks ago and $2,440s-50s in August. These are all potential supports now.
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1 month ago
NY Gold Futures »» Weekly Summary Analysis
By: Marty Armstrong | November 9, 2024
NY Gold Futures closed today at 26948 and is trading up about 30% for the year from last year's settlement of 20718. Up to now, this market has been rising for 12 months going into November suggesting that this has been a bull market trend on the monthly time level which has been confirmed by electing all of our model's long-term Bullish Reversals from the key low.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Gold Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2022 and 2015. The Last turning point on the ECM cycle high to line up with this market was 2020 and 2011 and 1996.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The NY Gold Futures has continued to make new historical highs over the course of the rally from 2015 moving into 2024. However, this last portion of the rally has taken place over 9 years from the last important low formed during 2015. Distinctly, we have elected four Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Gold Futures, this market remains moderately bearish position at this time with the overhead resistance beginning at 27334 and support forming below at 26834. The market is trading closer to the support level at this time.
On the weekly level, the last important high was established the week of October 28th at 28018, which was up 21 weeks from the low made back during the week of June 3rd. Afterwards, the market bounced for 21 weeks reaching a high during the week of October 28th at 28018. Since that high, we have been generally trading down for the past week, which has been a significant move of 5.407% in a reactionary type decline. Nonetheless, the market still has not penetrated that previous low of 23042 as it has fallen back reaching only 26503 which still remains 15.02% above the former low.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 28018 made 1 week ago. Still, this market is within our trading envelope which spans between 24565 and 28257. Immediately, this decline from the last high established the week of October 28th has been important, closing sharply lower as well. Before, this recent rally exceeded the previous high of 27087 made back during the week of September 23rd. That high was likewise part of a bullish trend making higher highs over the week of August 19th. This immediate decline has thus far held the previous low formed at 23042 made the week of June 3rd. Only a break of that low would signal a technical reversal of fortune and of course we must watch the Bearish Reversals. Right now, the market is neutral on our weekly Momentum Models warning we have overhead resistance forming and support in the general vacinity of 26544. Additional support is to be found at 26462. From a pointed viewpoint, this market has been trading down for the past week and it finished in a weak position right now warning we need to pay attention.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2020 while the last low formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2023 and thus we have a divergence warning that this market is starting to run out of strength on the upside.
Interestingly, the NY Gold Futures has been in a bullish phase for the past 23 months since the low established back in November 2022.
Critical support still underlies this market at 23260 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Immediately, the market is trading within last month's trading range in a neutral position.
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1 month ago
Gold Plunges Below Key Levels as Bearish Momentum Builds
By: Bruce Powers | November 6, 2024
• Gold plunges post-election, breaking key support at 20-Day MA and eyeing a retest of 50-Day MA near 2,638 for potential support.
Gold fell hard on Wednesday following the U.S. Presidential Election, reaching a low of 2,652. It fell through initial support levels at the 20-MA at 2,714 and the prior trend high and top of a bull flag pattern at 2,686. Today will likely end with a wide-ranging red candle and a weak close. At the time of this writing, gold continues to trade near the lows of the day and looks likely to close in the lower quarter of the day’s price range.
Bearish Momentum Accelerates
Given the accelerated downward momentum seen today, it looks like gold is heading for a retest of support around the 50-Day MA at 2,638, if not lower. The next lower pivot is at the bottom of the bull flag at 2,600. That low is also a higher swing low and therefore part of the price structure of the rising near-term trend. If it fails to hold as support and gold falls lower, a violation of the trend structure will occur thereby providing another bearish sign.
Targeting 50-Day Moving Average at 2,638
Nonetheless, the higher 50-Day MA has a good chance of seeing support. The 50-Day line was reclaimed in early-July after natural gas traded below the line for about 17 days. After the subsequent rally a pullback successfully tested support around the 50-Day line with a couple minor swing lows. Following the August 5 test of the 50-Day line, the bull trend accelerated, and the faster 20-Day MA began to identify support for the rising trend.
Trend Channel Failed Breakout
Let’s also consider the rising parallel trend channel with the lower line beginning from the mid-February swing low. A parallel of the trendline was then connected to where multiple highs and lows hit the line, as shown on the chart with red and green arrows. Subsequently, the market recognized resistance around the top channel line around the September high and then again with the most recent record high of 2,790.
The rally into new highs indicated a potential bullish breakout of the channel. Of course, given today’s bearish price action, a failed breakout has happened instead. Now that a bullish breakout has failed and key 20-Day MA trend support is broken, there is always the potential that gold falls to the lower uptrend line of the channel. When it is reached, if it is, will determine whether the 2,600-swing low is tested.
Weekly Bearish Pattern Triggered Today
As mentioned again yesterday, the weekly candlestick pattern (not shown) for last week was bearish. Gold ended with a doji shooting star formation that triggered below last week’s low of 2,725. The breakdown triggered today, and the subsequent bearish performance is what might be expected from such a weekly pattern.
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1 month ago
Gold 20-Day MA Support Faces Crucial Test
By: Bruce Powers | November 5, 2024
• Gold sees continued weakness, likely leading to a test of support near the 20-Day moving average as traders assess recent bearish signals and key support zones.
Gold dipped to a new pullback low of 2,725 on Tuesday as it continued to see weakness following a bearish one-day reversal last Thursday. Since then, momentum has died down as seen in the recent narrow range days. Gold looks to be on its way to test support around the 20-Day MA, now at 2,711.
The fact that it is doing so slowly may be an indication that underlying demand remains strong. If so, support at the 20-Day line might hold and lead to a bullish reversal. The potential significance of the 20-Day line is enhanced by the internal uptrend line that marks a similar price area.
Key Levels Seen at 20-Day MA
Since the 20-Day MA was reclaimed on August 8, it has done a good job of identifying trend support. There were a couple times since that gold fell below the line, but it didn’t last long. Therefore, support may be seen again around the 20-Day line. If it does not, and gold falls below the 20-Day line and stays there, it will highlight weakness and will improve the chance for a test of support around the 50-Day MA at 2,633.
However, potential support around the recent trend high and top of a bull flag pattern at 2,686, needs to also be considered. So, this means that if a decline below the 20-Day line occurs, watch the price action relative to the prior couple of times gold fell below the line since early-August, along with the 2,686-price zone.
Weekly Bearish Pattern a Concern
There is concern about a bearish pattern in the weekly chart for gold. Last week, a bearish doji shooting star pattern completed and the week closed below the previous record close of 2,747 from the week before. A bearish weekly breakdown triggers below last week’s low of 2,725. That would increase the chance of testing support around the 20-Day MA and the 2,686-prior high. However, if it is to trigger, it may not happen this week. It is too early to tell but there is a possibility that gold stays inside last week’s range until the close this week.
Finally, be aware that there have been two reversal days since a bull flag breakout triggered on October 15. There was an outside down day on October 23 and a sharp one-day bearish reversal to a three-day low on October 31.
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