Support remains around Prior High
Yesterday, support was seen around previous resistance at the August high at 2,532 and a 50% retracement level at 2,534. Also note that an extended lower channel line from a previous 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 an upturn. But first, progress above yesterday’s high is needed.
The recovery of the Rising Channel may take some time
The current correction has caused some technical damage on the way down, which may take some time to fully resolve. There was a decisive drop below the 50-day MA, the internal uptrend line, and an earlier daily swing low that is also a monthly low. It was the first time in nine months that a previous monthly low was broken downwards. Furthermore, the decline through the trendline caused a collapse of an ascending parallel trend channel.
The canal represented a degree of symmetry and now that symmetry has been broken. It also increases the chance that gold can eventually test support around the lower rising trendline. That would be a natural price increase after such a clear channel break. The price shown by the line would depend on when it was reached.
Bullish reversal above 2,619
A bullish reversal from yesterday’s lows will push gold into potential resistance at the previous swing low at 2,600, and then at Thursday’s high at 2,619. Thursday’s high can be used as a rough guide to the trendline price for now. Then there is currently the 50-day MA at 2,652. Given the potential significance of the collapses, it wouldn’t be surprising to see a rally in resistance followed by a decline that tests the week’s lows and possibly breaks below them. That scenario could change with a daily close above the 50-day MA.
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