Gold Price Threatening to Break Major Support
Gold Technical Highlights:
- Gold price comes off sharply, trying to break support
- It may take some time to digest if it can hold
- A break through support could find gold reeling towards 1400
Gold price comes off sharply, testing long-term support
The price of gold has been all over the place with financial markets getting crushed. There hasn’t been much safe about gold’s safe haven status recently as it too has generally suffered since stocks topped last month. Right now, it is working on breaking confluent support that could prove quite important soon.
The long-term zone from around 1575 down to 1520 dates back to the topping process from 2011/12. It was a stiff area of resistance from September through December, but has turned into support thus far this year. To a lesser degree of importance, is the trend-line running up from June under the November/December period to right now.
Confluent support is being seriously challenged, but can it hold? The thinking is that if gold is to turn bullish again it will need to hold support and then likely spend some time trading sideways, before it can gain the power needed to make another run higher. This makes now an important time for bulls.
On the flip-side, if gold cracks support starting with the trend-line and 1520, a much larger decline back towards 1400 could be in the works. But for now, support is support until broken even if it is barely holding, and may offer good risk/reward longs in the near-term if a rejection can develop. A slice on through with a strong close below support will help pave the way for momentum shorts.
Gold Price Daily Chart (sitting on trend-line, long-term support)
Gold Price Weekly Chart (bird’s eye view)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.