Gold Price Futures (GC) Technical Analysis – Plenty of Room to Downside with $1908.40 – $1889.70 the Target

Gold futures are trading lower early Thursday, pressured by a stronger U.S. Dollar, which is dampening demand for the dollar-denominated asset.

The strength in the U.S. Dollar index is being fueled by a drop in the heavily-index weighted Euro. The single-currency fell to a one-week low in Asia after the Financial Times reported that several members of the ECB’s governing council were concerned that the Euro’s rise could weigh on European growth.

At 06:50 GMT, December Comex gold futures are trading $1933.50, down $11.20 or -0.58%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, the formation of a second, secondary-lower top is indicating a shift in momentum to the downside.

Buyers are going to have to take out main tops at $2001.20 and $2024.60 to signal a resumption of the uptrend. Meanwhile a trade through $1908.40 will change the main trend to down, and a move through $1874.20 will reaffirm the downtrend.

The short-term range is $2089.20 to $1874.20. Its retracement zone at $1981.70 to $2007.10 is resistance. This zone stopped the rally at $2001.20 on Tuesday.

The minor range is $1908.40 to $2001.20. Trading on the weak side of its 50% level at $1954.80 is an indication of increasing selling pressure.

The major support zone is $1889.70 to $1842.60. This zone stopped the selling at $1874.20 on August 12. This area is controlling the near-term direction of the market.

Short-Term Outlook

Based on the early price action, the direction of the December Comex gold futures contract on Thursday is likely to be determined by trader reaction to the minor 50% level at $1954.80.

Bearish Scenario

A sustained move under $1954.80 will indicate the presence of sellers. The daily chart indicates there is plenty of room to the downside so we could see an acceleration into the next target price at $1908.40. This is followed by the major 50% level at $1889.70, the main bottom at $1874.20 and the major Fibonacci level at $1842.60.

Bullish Scenario

A sustained move over $1954.80 will signal the presence of buyers. They are going to try to form another higher bottom in an attempt to shift momentum to the upside.

If $1954.80 is overcome the look for a labored rally with potential targets coming in at a 50% level at $1981.70, a main top at $2001.20 and a Fibonacci level at $2007.10.

I wouldn’t get too excited about the upside until gold closes over $2007.10.

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