Rally Above 2,339 Will Show Strength
Another trendline and the 50-Day MA mark higher potential resistance around 2,339. Nonetheless, gold remains prone to a continuation of the retracement until there is a rally above the swing high of 2,369. Once this week ends, this week’s high will provide a lower price level to key on for the upside, along with the 50-Day line. If gold can get above the 2,369-swing high, it will be in a position to continue to strengthen from there. The big picture remains bullish, and the current retracement should eventually resolve itself to the upside. Whether it goes lower first remains to be seen.
Key Support at Week’s Low of 2,294
A decisive drop below this week’s low of 2,294 signals a continuation of the retracement. Recent support levels at swing lows of 2,287 and 2,277 will then be challenged. The first lower target is at the 61.8% Fibonacci retracement of 2,262. If that level is broken to the downside, we could see a rapid decline in the price of gold down to the area around the 78.6% Fibonacci retracement at 2,211. That level begins a potential support range derived from the resistance zone on the way up in March. Notice that the uptrend line, which has indicated support in the past, runs through the support zone.
RSI Trendline
Alternatively, as we’re seeing today, gold breaks below key levels but continues to drop in a sluggish manner. It is then followed by a bullish reversal following the break below support levels. The relative strength index (RSI) momentum oscillator has a three-point trendline and a potential double bottom. Although this is a secondary indicator, a break above the line and the double bottom provides evidence for improving demand in gold.
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Source: Gold Price Forecast: Faces Mixed Signals Amid Downtrend Correction
