GOLDBUGS AMEX Goldbugs Index (GOLD)

[DiscoverGold]

Navigating Gold’s Dilemma: Resistance, Retracement, and Breakout Clues
By: Bruce Powers | January 16, 2024

• As gold grapples with resistance, this week’s price action reveals a battle for direction. A breakout above 2,062 could pave the way for a bullish ascent towards record highs.

Gold continues to encounter resistance around the downtrend line. You can see today how the line was tested as resistance for the third day in a row thereby generating a third sequential lower high, which was at 2,056. Subsequently, price was rejected to the downside and gold then fell to a three-day low of 2,024 before a minor intraday bounce.



Bullish Signal Not till Breakout Above Last Week’s High of 2,062

This week’s price action has been contained within last week’s relatively wide range that takes the form of a bullish hammer candlestick pattern. However, there is no bullish signal until there is a breakout above last week’s high of 2,062. Given the weakness seen in the price of gold so far this week, it looks like near-term lower price levels are going to be tested in a retracement.

If last week’s low of 2,013 is not busted gold could end the week with an inside week, setting the stage for a pickup in volatility next week. If so, choppy price action may continue till the end of this week. Last week’s low is supported by the nearby 50-Day MA, now at 2,017, and the completion of the 61.8% retracement, that occurred at 2,017.

If Breakdown Triggers, Next Price Level is 1,998

If the retracement continues below last week’s low, lower price levels will be in sight. The 78.6% Fibonacci retracement is at 1,998, followed by the 50-Day MA at 1,957. Also, there is a minor price level around the 20-Day MA at 1,981. A deeper retracement would put the near-term rising trend channel structure at risk of being broken. Currently, that risk exists as gold is trading below the lower channel line increasing the chance that the breakdown from the channel could lead to further weakness.

Nevertheless, Last week’s high of 2,062 and low of 2,013 is the price range holding gold intact. Whichever way price breaks out is the likely direction it should continue to head in. An upside breakout will put gold back above both the uptrend and downtrend lines, and above the 20-Day line and trigger a bullish breakout of last week’s hammer candle. At that point it can prepare for an eventual test of record highs.

Read Full Story »»»

DiscoverGold