Gold Price Futures (GC) Technical Analysis Forecast – Trader Reaction to 50% Level at $1780.50 Sets the Tone

February gold futures extended their price slide to five month lows on Monday as prospects of a vaccine-led boost to the economy drove up demand for riskier assets, dampening the appeal of the asset that pays neither a dividend nor interest. The weak trade helped gold post its worst monthly performance in four years.

Short-term traders are moving money out of gold and into assets that are likely to produce faster gains, but longer-term investors, who tend to be patient, may be welcoming the weakness because it gives them the opportunity to add to their long positions at more favorable price levels. They are optimistic about gold over the long-run because they are counting on the central banks to continue to print money for many years to help the economy recover from the COVID-19 crisis.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1767.20 will signal a resumption of the downtrend. The main trend will change to up on a trade through $1973.70.

The minor trend is also down. A trade through $1884.70 will change the minor trend to up. This will also shift momentum to the upside.

The formation of a closing price reversal bottom and its subsequent confirmation will also shift momentum to the upside. Due to the prolonged move down in terms of price and time, today’s session begins with the market inside the window of time for this kind of chart pattern.

The main range is $1461.70 to $2099.20. Its retracement zone at $1780.50 to $1705.20 is controlling the longer-term direction of the market. It is currently being tested.

The minor range is $1884.70 to $1767.20. Its 50% level at $1826.00 is the first upside target.

The short-term range is $1973.70 to $1767.20. Its retracement zone at $1870.50 to $1894.80 is another potential upside target area.

Daily Swing Chart Technical Forecast

Monday’s price action suggests the direction of the February Comex gold futures contract on Tuesday will be determined by trader reaction to the major 50% level at $1780.50.

Bearish Scenario

A sustained move under $1780.50 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into $1767.20. This is a potential trigger point for an acceleration to the downside since the next major support is a price cluster at $1705.20 to $1699.50.

Bullish Scenario

A sustained move over $1780.50 will signal the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into the minor 50% level at $1826.00.

Overcoming $1826.00 could trigger an acceleration into $1870.50 to $1894.80. Inside this zone is the minor top at $1884.70.

For a look at all of today’s economic events, check out our economic calendar.