Gold Price Analysis: Short-Term Pullback After Failed Breakout

Bruce Powers
Published: Sep 19, 2023, 20:06 GMT+00:00

Despite a recent failed breakout attempt, gold maintains a bullish outlook. A weekly breakout above 1,931 and a two-day low at 1,923 are key levels to watch for potential moves.

Gold bullion, FX Empire

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Gold Forecast Video for 20.09.23 by Bruce Powers

Gold triggered a bullish continuation for the bounce as it rose above Monday’s high but quickly hit resistance around the downtrend line. Today’s high is 1,937. Once hit, gold sold off and fell back into Monday’s price range where it also tested support of the 55-Day EMA, currently at 1,929. Tuesday’s low at the time of this writing is 1,930.

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Short-Term Bearish

Today’s attempt to break out above the downtrend line has failed and gold is set to close with a short-term bearish candlestick pattern for today. The candle is red and is set to close in the lower third of the day’s range, not a sign of strength. Therefore, a pullback or consolidation is possible before another attempt to breakout higher. A decline below today’s low will signal a likely deeper pullback. Then, how gold closes relative to the 55-Day line may provide some insight.

Earlier Signs of Bullish Momentum Should Return

Given the strong bullish behavior seen over the prior two days, the expectation is for a minor pullback. Further, yesterday a weekly breakout occurred on a move above last week’s high of 1,931, from a bullish hammer candlestick reversal pattern. It was confirmed by Monday’s close of around 1,934. The two-day low of 1,923 is a minor price level to watch if a deeper pullback occurs, followed by the 200-Day EMA at 1,910.50.

Once Strength Signaled, Gold First Heads Toward 1,942

Following an eventual breakout above the trendline, gold would be heading first towards the 78.6% Fibonacci retracement at 1,942, followed by the 1,953-swing high from September 1. There is also a weekly high close by at 1,946. Together, they set up a price range from around 1,946 to 1,953. Resistance might be seen anywhere around that range. A daily close above the 1,953 level will confirm the continuation of the portion of the trend begun from August 21 swing low (A). The related rising ABCD pattern shows a target around 1,969. It has a decent chance of being reached once gold shows new signs of strength and completes a breakout of the trendline.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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