Gold (XAU/USD) Price Forecast: Resistance Holds, Watching Downside Targets

Bearish Reversal Signals Initial Resistance

Gold triggered a one-day bearish reversal of a shooting star candlestick pattern on Thursday, suggesting that an initial upside target may have been reached. Initial resistance for the bounce from Monday’s low of $4,099 seems to have been established at Wednesday’s high of $4,603.

That level successfully tested resistance near the prior key trend support indicator – the 100-day moving average. It was also the first pullback to retest this average as resistance following last week’s breakdown. Once prior support becomes resistance, selling pressure intensified, a dynamic confirmed by the shooting star reversal. A low of $4,364 was reached for the day at time of writing.

Confluence of Trendlines and Moving Averages

Further, the area around the 100-day average is reinforced as a resistance zone by the top boundary line of an ascending trend channel, which will soon converge with the rapidly falling 10-day moving average at $4,677. Since solid support was seen this week near the 200-day moving average, now at $4,107, gold remains contained within a range defined by support near the 200-day average and resistance near the 100-day average.

Short-Term Targets and Key Support Levels

Thursday’s bearish price action indicates downward pressure that likely sets up additional tests of support. Two initial lower short-term targets include the 61.8% Fibonacci retracement at $4,291 and the 78.6% Fibonacci retracement at $4,206. The later carries greater significance as it aligns with the midline of the rising channel, was near Monday’s low, and has historically acted as both support and resistance. This setup suggests traders should monitor momentum indicators closely, as oscillators and volume patterns may provide early signals of either a pause in selling or acceleration of declines.

Bearish Continuation and Resistance Recovery

A bearish continuation would be invalidated by a recovery of Thursday’s high of $4,544 and then the 100-day moving average. However, because the top channel line and 100-day average are rising, even a recovery of Wednesday’s lower swing high may still encounter downward pressure from these trend indicators. The chart also shows an internal uptrend line from the August lows marking the support zone.

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