Gold Technical Outlook:
- Gold continues to look weak, could hit big support relatively soon
- A move higher could be sluggish as trend remains unfavorable
Gold continues to look vulnerable as the general tone and trend remain weak. We’ve seen a bit of a bounce the past few sessions, but if recent history is to hold then it should be at or very near an end. On further weakness we may see a major long-term level hit.
There is a minor trend-line from the March 2020 low, but it isn’t where the primary focus is. The 1676 area, just below the trend-line, is a major point of interest that started just prior to the pandemic. It was first resistance, then it became a shelf of support during the spring of last year.
From there it held on two occasions during March of this year and effectively marked the end of the August mini flash-crash. All these touches of the same area make for a significant inflection point. If we see it soon, from a tactical standpoint it could make for a good bounce opportunity for short-term players and a point of entry for the longer-term minded participants.
A break below this line-in-the-sand could mark a major blow to the longer-term prospects of gold. But before worrying about that we will respect support until broken.
If gold maintains here and tries to reverse course higher, it could be a bit of a slog as the general trend remains unfavorable. A climb through the 200-day and June trend-line would have a big area in focus around 1830, where several peaks during the summer were made. These levels would likely be in confluence with the trend-line running off the record high. This would become another major focal point for the market.
Gold Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
