Two major support levels at 20 and 50 day MAs
A drop below the current low of 2,643 will cause a bearish continuation of today’s decline. Two key levels to help assess the health of the uptrend are first identified by the 20-day MA, now at 2,568, and then the 50-day MA, currently at 2,498. In both cases, the moving average line has converged with the relative uptrend line, which also marks potential support.
On the way down, gold may first encounter support around the 38.2% Fibonacci retracement at 2,633. A sustained upward reversal from that price level would be a stronger indication of strength than a decline to lower levels. The next lower level to pay attention to is the 50% retracement at 2,616, along with this week’s low at 2,614.
Previous high and 61.8% retracement point to 2,600
Nevertheless, once a market reaches a breakout level, it may eventually pull back to test previous resistance as support. For gold, that price level would be the previous trend high of 2,600, combined with potential support from the 61.8% Fibonacci retracement sitting at the same price. Below you will find the 20-day MA and ascending trendline.
In addition to today’s bearish price action, the relative strength index (RSI) momentum oscillator appears to be recovering from overbought as it is poised to fall below the 70 overbought level. This would support a bearish continuation in the near term. If gold holds above the 20-day MA during a retracement, the potential remains for an eventual continuation of the bull rally for gold.
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