Gold Price Futures (GC) Technical Analysis – Taking Out $1282.40 on Weekly Chart Could Trigger Acceleration to Downside

Gold prices fell last week with the market hitting its lowest level since December 27. Driving the market lower was a stronger U.S. Dollar. The dollar rose in reaction to rising U.S. Treasury yields. The catalyst behind the price action was the news that the United States and China may have offered concessions during the mid-level trade talks in Beijing earlier in the month.

Last week, February Comex gold settled at $1282.60, down $6.90 or -0.54%.

Weekly Technical Analysis

The main trend is up according to the weekly swing chart, however, there are signs that the upside momentum may be slowing. A trade through $1300.40 will signal a resumption of the uptrend. The main trend will change to down on a move through $1202.40.

The major range is $1393.70 to $1173.20. Its retracement zone at $1285.70 to $1312.30 is controlling the near-term direction of the market. This zone is also providing resistance, having stopped the rally the week-ending January 4 at $1300.40.

The short-term range is $1202.40 to $1300.40. Its retracement zone at $1251.40 to $1239.80 is the first downside target.

The main range is $1173.20 to $1300.40. Its retracement zone at $1236.80 to $1221.80 is the second downside target.

The combination of the two retracement zones creates a value area at $1239.80 to $1236.80.

Weekly Technical Forecast

Based on last week’s close at $1282.60 and the price action the last three weeks, the direction of the February Comex gold futures contract this week 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. If this generates enough upside momentum then look for a drive into the $1300.40 high. Overtaking this level is likely to trigger a move into a long-term downtrending Gann angle at $1311.70, followed by the major Fibonacci level at $1312.30. This price is the trigger point for an acceleration to the upside with $1352.70 the next major target.

Bearish Scenario

A sustained move under $1285.70 will signal the presence of sellers. Taking out the steep uptrending Gann angle at $1282.40 could trigger an acceleration to the downside with the first target a 50% level at $1251.40. This is followed by an uptrending Gann angle at $1242.40. This is followed by the weekly support cluster at $1239.80 to $1236.80.

The weekly chart indicates there is plenty of room to the downside under $1282.40, but the true breakout level may be $1278.10. Look for a buying opportunity on a break into $1251.40 to $1236.80.