Gold Price Futures (GC) Technical Analysis – Price Action Suggests Trader Reaction to $1746.90 Sets the Tone

Gold futures are edging lower early Wednesday after touching its highest level since March 25 the previous session. On Tuesday, gold jumped as the U.S. Dollar fell to a two-week low against a basket of currencies as traders booked profits in the greenback after a strong March and as a drop in Treasury yields from recent peaks put pressure on the greenback while shaking out a few of the weaker shorts in the gold market.

At 04:33 GMT, June Comex gold futures are trading $1739.50, down $3.50 or -0.20%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1756.00 will change the main trend to up. A move through $1677.30 will signal a resumption of the downtrend, following the four-day counter-trend rally.

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

The first short-term range is $1817.60 to $1676.20. Its 50% level at $1746.90 is the first upside target and potential resistance. This level may have stopped the rally on Tuesday.

The second short-term range is $1858.90 to $1676.20. Its 50% level at $1767.60 is the next potential upside target and resistance area.

Daily Swing Chart Technical Forecast

The direction of the June Comex gold market on Wednesday is likely to be determined by trader reaction to $1746.90.

Bearish Scenario

A sustained move under $1746.90 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into the major Fibonacci level at $1711.90. A move under this level could trigger an even further decline with the next support area $1677.30 – $1676.20.

Bullish Scenario

A sustained move over $1746.90 will signal the presence of buyers. Taking out the main top at $1756.00 will change the main trend to up. This could create the upside momentum needed to challenge the 50% level at $1767.60. Sellers could come in on the first test of this level, but overtaking it could trigger a further rally into the major 50% level at $1788.50.

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