Gold Price Futures (GC) Technical Analysis – Closing Price Reversal Top, First Sign of Weak Buying

Gold futures hit a 7-year high early in the session on Tuesday, but then the profit-takers and short-sellers took over, sending the market lower for the session. The pattern formed was a potentially bearish closing price reversal top. This doesn’t mean the trend is getting ready to change to down, but if confirmed, we could see the start of a 2 to 3 day sell-off.

Another interpretation of the chart pattern suggests that due to the prolonged move up in terms of price and time ($212.80 in 8 days), the selling may be greater than the buying at current price levels. Others may also interpret the pattern to mean that the buying dried up and the sellers stepped in.

At 20:52 GMT, June Comex gold futures are trading $1755.70, down $5.70 or -0.32%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend will change to down on a move through the last swing bottom at $1576.00.

The minor trend is also up. A trade through $1670.70 will change the minor trend to down. This will also shift momentum to the downside.

On Tuesday, June Comex gold formed a potentially bearish closing price reversal top. A trade through $1747.10 will confirm the chart pattern. This could trigger a 2 to 3 day break or a 50% to 61.8% correction of the last price swing.

The short-term range is $1576.00 to $1788.80. Its retracement zone at $1682.40 to $1657.30 is the first downside target zone.

The intermediate range is $1453.00 to $1788.80. Its retracement zone at $1620.90 to $1581.30 is the second downside target zone.

Short-Term Outlook

Trader reaction to Tuesday’s low at $1747.10 is likely to set the tone for June Comex gold early Wednesday.

A trade through $1747.10 will confirm the closing price reversal top. If this creates enough downside momentum then look over the next 2 to 3 days into $1682.40 to $1657.30. Since the main trend is up, buyers are likely to come in on a test of this area.

Taking out $1788.80 will negate the closing price reversal top and signal a resumption of the uptrend with $1800.00 the first target.