Support Confluence Drives Bullish Reversal
Gold triggered a continuation of the bullish advance that followed the recent swing low of $4,099 from March. That was a successful test of support near the 200-day moving average for the first time since February 2024. The subsequent sharp reversal from the price zone confirmed a successful test of dynamic support. Moreover, the zone was also confirmed by the convergence of the midline of a large rising trend channel, an internal uptrend line, and the 61.8% Fibonacci retracement of a prior upswing. Additionally, a lower boundary line for a falling trend channel was near the low, reinforcing the support area.
Measured Move and Resistance Interaction
A sharp rally followed into resistance near the 100-day moving average, establishing a swing high for the bounce. That high ended the first leg up from the low and defined the AB leg of the current advance. The second leg up began from a subsequent higher swing low at $4,351 (C). A projected target for the second leg, CD, is at price symmetry with the first leg.
It is interesting to see that during Wednesday’s session gold rallied to a 14-day high of $4,857 before sellers regained control, driving price into the lower third of the days range at the time of writing. That advance found resistance once there was symmetry between the AB and CD upswings around $4,861.
20-Day Moving Average Reclaimed
For five days, gold has been pushing up against resistance defined by the 20-day moving average. A recovery of that average occurred on Wednesday, and the full range of the day, from $4,713 to $4,857, was above the 20-day average, marking it as a support zone, after previously representing resistance since it failed as support on March 12. The intraday pullback may be a short-term reaction if support is sustained at or above the 20-day moving average, now at $4,689.
Path Toward 50-Day Test
If support remains above the 20-day moving average, then there remains a possibility that gold retains strength into a test of resistance near the 50-day moving average. It was a significant short-term trend indicator until is was broken to the downside on March 18. The current advance is the first swing towards that average to test it as resistance. Once this test of prior support as resistance is complete, the bullish trend should be positioned to reassert itself, potentially continuing the upward momentum that began at the March low.
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