Gold Price Futures (GC) Technical Analysis – Closing Price Reversal Top May Be Indication of Momentum Shift

Gold futures finished sharply lower on Friday, producing a potentially bearish closing price reversal top in the process. The chart pattern suggest the selling may be greater than the buying at current price levels.

After hitting its highest level since June 19, sellers came in hard in response to better-than expected U.S. Non-Farm Payrolls data and dovish remarks from Fed Chair Jerome Powell. Both events eased concerns about an economic slowdown, while driving up demand for higher-risk assets.

On Friday, February Comex gold futures settled at $1286.20, down $8.60 or -0.66%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Friday’s closing price reversal top may have shifted the momentum to the downside.

A trade through $1300.40 will negate the closing price reversal top and signal a resumption of the downtrend, however, taking out $1278.10 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 day counter-trend break.

The major long-term retracement zone at $1285.70 to $1312.30 is acting like resistance.

The short-term range is $1236.50 to $1300.40. Its 50% level at $1268.50 is the first downside target.

The intermediate range is $1216.80 to $1300.40. Its 50% level at $1258.60 is the second downside target.

The main range is $1202.40 to $1300.40. Its retracement zone at $1251.40 to $1239.80 is the primary downside target.

Since the main trend is up, look for buyers to come in on a test of the retracement levels.

Daily Swing Chart Technical Forecasts

Based on Friday’s price action and the close at $1286.20, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the major 50% level at $1285.70.

Bullish Scenario

A sustained move over $1285.70 will indicate the presence of buyers. The first upside target is $1289.30. Overcoming this level will indicate the buying is getting stronger. The main target is $1300.40. Taking out this level could trigger a surge with the major Fib level at $1312.30 the next upside target.

Bearish Scenario

A sustained move under $1285.70 will signal the presence of sellers. The first downside target is $1278.10. Taking out this level will confirm the closing price reversal top. If this move creates enough downside momentum then look for the selling to extend into $1268.50.

Watch for a technical bounce on the first test of $1268.50. If it fails to hold then look for the selling to possibly extend into $1258.60.

While the closing price reversal top is a potentially bearish chart pattern, it has to be confirmed with heavy volume follow-through selling. Otherwise, we could see a sideways trade today.