Lower target hint
There are several indications that gold could fall further before the correction is complete. First, it attempted a bull breakout from a descending parallel trend channel on December 10, but quickly failed, leading to a decline below the upper channel line.
A failed pattern has the potential to reverse sharply in the opposite direction. That may be what is happening with gold now. Since there was a bearish reversal from the top of the channel, the bottom of the channel is an eventual possible target. This doesn’t mean it will be achieved, but it does indicate that the salespeople can still take the lead for a while.
Bearish Indications
Note that as gold fell from the 2,726 swing high (C), it fell 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 the price was rejected down from the area around the 20-day MA. This shows that previous support is being confirmed as resistance, and this is bearish behavior. Bearish sentiment was then confirmed today with a move up to test resistance around the bottom of a small rising trendline, starting from the low at 2,605 swings.
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 retested. If that price zone fails to stop the decline, the next lower price zone around 2,473 becomes a target. That price level is the 61.8% Fibonacci retracement for the rebound that started from the May low. It also includes the target for a descending ABCD pattern at 2,475.
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