Gold Price Futures (GC) Technical Analysis – Testing Last Support Level Before Steep Plunge

Gold plunged on Thursday after Treasury yields spiked higher, making the greenback a more attractive asset. The moves helped drive down demand for dollar-denominated assets like gold. The catalysts behind the selling pressure were comments on Wednesday from Fed Chair Jerome Powell. His remarks spooked gold bulls because they indicated the Fed would not be cutting rates later in the year as previous priced into the market.

On Thursday, June Comex gold futures settled at $1272.00, down $12.20 or -0.95%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It was reaffirmed on Thursday when sellers took out the previous bottom at $1267.90. A trade through $1290.90 will change the main trend to up.

Perhaps the easiest way to analyze the gold market at this time is to use the swing chart in combination with key retracement levels.

The main bottom is $1215.00 from November 13, 2018. The main top is $1356.00 from February 20, 2019. It retracement zone is $1285.50 to $1268.90.

The second main bottom is $1228.90 from November 28, 2018. Its retracement zone is $1292.50 to $1277.50.

The third main bottom is $1249.00 from December 14, 2018. Its retracement zone is $1302.50 to $1289.90.

Daily Swing Chart Technical Forecast

Based on Thursday’s close at $1272.00, the direction of the June Comex gold market on Friday is likely to be determined by trader reaction to the Fibonacci level at $1268.90.

Bullish Scenario

A sustained move over $1268.90 will indicate the presence of counter-trend buyers. They could be bottom-pickers, value-seekers or defenders against a steep $20 break.

If they can create enough upside momentum then look for a labored rally into layers of potential resistance at $1277.50, $1285.50, $1289.90, $1290.90 and $1292.50.

The market will start to open up to the upside over $1292.50 and $1302.50.

Bearish Scenario

A sustained move under $1268.90 will signal the presence of sellers. This is a potential trigger point for an acceleration into $1249.00. This is another trigger point for a plunge into $1228.90, followed by $1215.00.

As you can see from the chart, crossing to the weak side of a number of retracement levels is bearish for gold. It’s going to take a lot of buying power to get through that thick wall of resistance.