Gold forecast for the week of January 23, 2017, Technical Analysis

Gold markets initially tried to rally during the course of the week, but found enough resistance above to turn things back around to form an exhaustive candle. What I find interesting is that the exhaustive candle is at the 30.2 Fibonacci retracement level, an area that you would see quite a bit of interest. Because of this, and the fact that the $1200 level is right there, I suggest that the market will probably pull back. If we can break down below the bottom of the shooting star, the market should then reach down towards the 1150 level, and then the lows again at 1125. Alternately, if we break above the top of the shooting star, then we will more than likely reach towards the 50% Fibonacci retracement level, which is at the 1230 handle.

There is a longer-term downtrend in effect at the moment, and because of that it’s likely that the sellers will be very interested in this market. After all, just above there is a massive amount of resistance just above as we had seen so much in the way of support during 2016. Because of this, I think that ultimately the gold markets will fail as it has been suggested by Philadelphia Federal Reserve Pres. Harker that we should see three more interest rate hikes during the course of the year. That of course is good for the US dollar, which typically works against the value of gold.

Ultimately, expect a lot of volatility but I don’t think that the gold markets will be able to break through all the massive resistance above, at least not anytime soon. I believe the gold has reached its pinnacle for this leg of the move, and with that being the case I think there is an argument to be made for selling. If we break above the 50% Fibonacci retracement level, that would of course signify that we will probably change the trend to the upside. However, currently I believe that the market is getting a bit exhausted.

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