Test of previous trend support as resistance
Note that the lines were around resistance at the highs of the day from Monday through Wednesday this week. Therefore, if Wednesday’s bear trigger is a downtrend, it is possible that gold could encounter resistance around the 20-day MA and then fall again.
Lower target levels below this week’s low start with the 78.6% retracement at 2,576, not much lower than this week. However, if lower prices continue, the recent swing low at 2,537 could be tested as support. Looking at the developing downtrend channel, there appears to be an increased risk that the 2,537 price level could move down. That would leave a price zone around 2,475 to 2,473 as the next target zone below 2,537.
Bearish Persistence could eventually lead to 2,575
There are several clues that point to that price zone. A bearish ABCD pattern (purple) reaches an initial downside target at 2,475. That is where there is symmetry in the price between the two legs down and therefore it could be at pivot level. The 61.8% Fibonacci retracement is at 2,473. Furthermore, the price zone appeared to offer both support and resistance earlier this year, starting from the high in July.
Rise above 2,664 weekly high sentiment changes
Despite the potential for a bearish continuation, the outlook could 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 note that gold on the weekly chart (not shown) fell below the 20-Week MA this week, but is on track to close above it today. This means that the 20-Week MA is showing support again, which is bullish over the longer time frame. Nevertheless, price action and patterns will provide clues.
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