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Another leg down in gold has been anticipated given last week\u2019s bearish reversal following a new record high of $2,956. The week ended with a weekly bearish engulfing pattern as gold fell below support of the prior two weeks and it ended the week in a bearish position, in the lower third of the week\u2019s trading range. Furthermore, a breakdown of a rising trendline and 20-Day MA triggered, thereby further confirming weakness. There has been only one leg down from the $2,956 record high today and a minimum of two legs down is common for a bearish retracement.<\/p>\n
This week\u2019s advance tested prior support of the trendline as resistance, and resistance was seen around the line. The 20-Day line is the other trend indicator that was tested as resistance, but it failed as resistance because gold rose above the 20-Day MA and traded above it for four days. Nonetheless, taken together, gold may have completed its counter trend rally to test prior support as resistance. Once that happens, the chance for a bearish continuation improves.<\/p>\n
An inside week is established for this week, leaving two key price levels to be considered. The low for the week was $2,855 and the high is $2,930. A decisive move through either price level may determine the next direction. Although the technical evidence is more on the bearish side, a sustained rally above this week\u2019s high would require a realignment of views and would open the possibility of a bullish continuation of the trend in the near term. On the downside, the next lower target for gold if the recent swing low at $2,833 fails to retain support, is a range around $2,813 to $2,810, consisting of the 38.2% Fibonacci retracement and the initial target for a falling ABCD pattern, respectively.<\/p>\n