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Next Lower Target is $2,813
The next downside target is the three-week low at $2,813. However, given today’s bearish momentum and decline below key price levels, it looks likely that the three-week low will also fail as support. Further down is the minimum anticipated 38.2% Fibonacci retracement at $2,813, which may show signs of support.
Nevertheless, once one key moving average is broken the next higher moving average becomes a potential target. Therefore, the 50-Day MA is a maximum lower target for the correction. It is currently at $2,764 and rising, therefore close to converging with the 50% retracement level at $2,769.
Lower Potential Targets
A long-term bull trend continuation signal was generated in late-January on a breakout above the prior trend high at $2,790. That price level was resistance for the uptrend for approximately 13 weeks before it was surpassed. Therefore, it could easily be tested as support during a bearish retracement. Furthermore, since the 50-Day line is rising, it could converge with the former $2,790 high before it is reached.
Or certainly be in the vicinity of that price level. Nonetheless, it can also be considered the top of a potential support range going down to the 50% retracement at $2,769. This is assuming that the 50-Day line matches or exceeds the 50% retracement in the coming days or weeks.
Signs of Strength to Face Downward Pressure
Rallies will likely be used by investors to exit long positions and enter shorts. The 20-Day MA at $2,892 is an obvious potential resistance along with the lows of the previous couple of days at $2,888. Finally, since the month of February ends tomorrow, gold is at risk of ending the month in a relatively weak position in the lower half of the month’s trading range.
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