Gold Price Futures (GC) Technical Analysis – Facing Wall of Resistance from $1746.90 to $1788.50

Gold futures closed higher on Thursday after confirming the previous session’s closing price reversal bottom. Short-Covering ahead of the long Easter weekend and Friday’s U.S. Non-Farm Payrolls report was likely responsible for the second consecutive price surge.

Volume was thin with many of the professional players on the sidelines so we don’t think a major buyer was behind the move. Furthermore, the fundamentals are bearish. Before we can get bullish, the market has to form a support base or a “W” pattern.

Following a prolonged move down, the first leg up is typically short-covering. This is followed by a two-day pullback. If the market is going to move higher then buyers will come in on the pullback.

On Thursday, June Comex gold settled at $1728.40, up $19.60 or 1.15%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside following the confirmation of Wednesday’s closing price reversal bottom. A closing price reversal bottom doesn’t change the main trend to up, but it could trigger a 2 to 3 day counter-trend rally.

A trade through $1677.30 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through $1756.00.

Gold is currently trading inside a major retracement zone at $1711.90 to $1788.50. This zone is controlling the longer-term direction of the market.

The first minor range is $1756.00 to $1677.30. The market is currently trading on the strong side of its 50% level at $1716.60.

The second minor range is $1817.60 to $1676.20. Its 50% level at $1746.90 is the next potential upside target.

The short-term range is $1858.90 to $1676.20. Its 50% level at $1767.60 is another potential upside target.

With all of this potential resistance, it’s hard to get excited about the long-term prospects of a rally unless buyers can take out the long-term 50% level at $1788.50.

Short-Term Outlook

The direction of the June Comex gold futures contract is likely to be determined by trader reaction to the long-term Fibonacci level at $1711.90.

Bullish Scenario

A sustained move over $1711.90 will indicate the presence of buyers. This could trigger a quick move into $1746.90, followed by $1756.00. Taking out the latter could lead to an extension of the rally into $1767.60 and $1788.50.

Bearish Scenario

A sustained move under $1711.90 will signal the presence of sellers. This could trigger a quick break into a new minor 50% level at $1704.60, followed by a pair of bottoms at $1677.30 and $1676.20. The latter is a potential trigger point for an acceleration to the downside.