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Gold shows slowing downward momentum today as it trades inside day. Today was the first day in eight that it didn’t trade with a lower daily low and lower high. Nevertheless, following an intraday bounce to a high of 1,897, as well as the completion of a 61.8% Fibonacci retracement of yesterday’s range, gold is back testing the lows of the day. It looks like it may close today’s session as a bearish inverse momentum hammer candlestick pattern.
Although downward momentum may have slowed, today’s price action says the bears remain in charge. Further, gold is on track to end the day as the third day in a row to close below the June 29 swing low of 1,893. It was support and now resistance. This type of price action further confirms a bearish continuation as support is recognized as resistance on multiple days. Nevertheless, additional confirmation is needed for a signal.
Potential Downside Targets at 1,879 and Fibonacci Confluence Zone
A decisive decline below today’s low of 1,887 (at time of writing) has the downtrend continuing. The first target looks to be around two prior swing highs that stand out around 1,879. However, there is no further confirmation for that price area. So, it can be considered less significant than the lower technical target zones and therefore likely to be busted. If it is busted, then gold looks to be heading to a Fibonacci confluence zone from around 1,871 to 1,864.
Long-term Signals from Monthly Charts Influencing Trend
As noted earlier in the week, gold triggered a bearish monthly signal as it fell below last month’s low of 1,903. The longer time frame charts inform and can dominate the price action occurring in the lower time frames. So far, the bearish signal is working out and is evidence supporting a bias to the downside. At least until a support level can reached that leads to a clear bullish reversal.
Further concern from the monthly chart is the 12-Month EMA. It is currently at 1,889.67 and has reflected support since December when gold rose back above the line after being below it for six months. Trend lows are now testing that price zone as support, and it looks like it may not hold. Yesterday’s low of 1,885 was below the line and the close was at the line. A clear daily close below 1,889.67 will confirm a breakdown of the 12-Month EMA.
For a look at all of today’s economic events, check out our economic calendar.
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