Gold Stalls Near Prior Highs in Anticipation of Next Move

Bruce Powers
Published: Mar 24, 2023, 20:01 GMT+00:00

Gold consolidates near trend highs following bull trend continuation off 38.2% Fibonacci support.

Gold, FX Empire

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Gold Forecast Video for 27.03.23 by Bruce Powers

Gold pulls back following an attempt to break above yesterday’s 2,003 high earlier in the day. The high for the current trend is around 2,010. As of now, gold will end Friday as an inside day. This provides a rest for gold before it makes another attempt to trend higher if it is to do so.

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Will Gold Keep Rising Before a More Significant Price Correction?

It is not clear yet whether gold will continue higher in the near-term, pullback first, or consolidate. Certainly, it has shown strong bullish behavior recently and is currently poised to continue higher. A strong advance off the March 8 swing low to the current trend high was 11.1% in only eight days. While the subsequent retracement reversed off support of the 38.2% Fibonacci retracement. This is considered a sign of strength as buyers were aggressive enough to turn price higher before a deeper correction.

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Moreover, the larger technical picture in gold is bullish as a large multi-year cup with handle basing pattern has been forming for years. You can see on the monthly chart that current price action is occurring above the first trend high in 2011, which is bullish. Further, it has clearly held support of the 21-Month EMA as it was tested the past four months. That is after it was below the line for five months. Although it is still a little early, gold is currently on track to end March at the highest monthly close ever as it looks to potentially break out to record highs.

Regardless of Recent Strength, Short-term Weakness is Still Possible

Today’s stall at yesterday’s high reflects at least minor resistance near the recent trend high and therefore resistance could continue to present itself for a while longer. In addition, the 14-Day RSI has moved from overbought to back below the 70 reading. On an intraday basis, this shows up as bearish divergence. Resistance is represented by the top trendline, completion of a measured move (1, 2), and a 127% extension. A drop below yesterday’s low of 1,964 increases the risk for a longer wait before new trend highs as a test of the recent pullback low of 1,934 may be in the works.

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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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