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Gold Retracement: Key Support Areas and Potential Upside Targets

By:
Bruce Powers
Updated: Jun 2, 2023, 20:19 GMT+00:00

Current retracement in gold calls for caution as it works its way through, with a potential target of 2,002 from a rising ABCD pattern once the correction is complete.

Gold, FX Empire

In this article:

Gold Forecast Video for 05.06.23 by Bruce Powers

Gold tested resistance for a second day today with a high of 1,983. Subsequently, sellers became more aggressive and pushed gold down below yesterday’s 1,953 low, which is where it resides at the time of this writing. However, that low completed a 61.8% Fibonacci retracement (1,952). Although there are no signs of it yet, this would be a logical price zone to complete the current retracement. Keep in mind that if it stays down into the close it will close weak, in the lower half of the week’s range.

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Lower Possible Support Areas

Continuation lower will have gold first targeting the longer uptrend line, followed by the 78.6% Fibonacci retracement. The trendline is currently around 1,943 and the Fibonacci level is also at 1,943. This makes 1,943 an important potential pivot to watch as two indicators identify the same price. Further down is the next trendline around 1,940. Moreover, the latest swing low is at 1,932. The swing low is the most significant price level as it forms the trend structure of higher swing lows and higher swing highs. If violated to the downside, the rising channel pattern would potentially be broken. Potentially, because what happens after that will be important.

Retracement To Date Should Resolve Itself to the Upside

It should be noted that the current retracement is a normal pullback as a bottom works its way through. The rally that peaked today retraced less than 38.2% of the previous decline and did not get above last week’s high of 1,985. In other words, it wasn’t as strong as it could be and keeps gold as risk of a further correction.

New ABCD Pattern Targets 2,002

Heading into next week, this week’s low and high will be key. On the upside a rally above this week’s high, also today’s high, will be needed to confirm a bullish positive. At that point gold would next be looking to complete a rising ABCD pattern that has been redrawn on the chart to include today’s low. If today’s low is not the low for the retracement, the target will be slightly lower. Currently, the ABCD pattern completes around 2,002.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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