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Gold Price Technical Outlook - Pullback Over?

Gold Price Technical Outlook - Pullback Over?

2019-10-02 11:00:00
Paul Robinson, Currency Strategist
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Gold Price Technical Outlook:

  • Gold H&S triggered, testing neckline
  • Support and resistance levels to watch

For an intermediate-term fundamental and technical viewpoint, see the Gold Price Forecast.

Gold H&S triggered, running into first levels of support

The recent decline in gold from the 2011/12 resistance zone of 1521/75 put in the right shoulder of an H&S top and forced a technical break of the pattern on Monday by dropping below its neckline. Yesterday’s turnabout day off of lower parallel support already has gold testing the neckline.

Will the neckline keep a price advance suppressed, or is the down-move from the topping pattern already finished? The price sequence occurring around major long-term resistance makes a solid case for further downside, but with support not far below there may not be much room for weakness to run its course.

The July high at 1452 and a level from 2013 (1432) that caused some problems over the summer are viewed as moderately strong levels of support. The parallel running lower could intersect with levels at some point in the not-too-distant future, giving them further strength.

For now, respecting the neckline as resistance is the first step. Stay below and the near-term bias is neutral to lower. Break above and this outlook only becomes neutral as the trend structure off the September high is still negative and you have the upper parallel to contend with as resistance.

The H&S and trend structure could morph into a bull-flag at some point, but this will require a fair amount of work first. It’s not the easiest spot for traders to be in at the moment, but, again, stay below resistance and the bias is at best neutral if not outright bearish.

Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.

Gold Price Daily Chart (neckline, lower parallel)

Gold Price Technical Outlook - Pullback Over?

Gold Price Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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