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Gold’s Battle: Testing Resistance and Chart Dynamics Unveiled

By:
Bruce Powers

Volatility looms for gold as it navigates resistance at 2,041. Symmetrical triangle dynamics and compressed MAs hint at an imminent breakout, offering traders opportunities amid uncertainty.

Gold cart, FX Empire

In this article:

Gold Forecast Video for 24.01.24 by Bruce Powers

For the second day in three gold tests resistance around the 20-Day MA (purple) with a high on Tuesday at 2,038, putting in a higher daily high and high low. It also continues to test the 50-Day MA (orange) as support. The 50-Day line has held up as support for the past few days. Today’s price action creates a slight change in the chart for gold as it broke above yesterday’s high of 2,032, providing a new sign that the bounce off the recent swing low at 2,002 may have more upside to go. Yet, it faces resistance. A daily close above yesterday’s high of 2,032 shows greater strength than a close below that price level.

A screenshot of a graph Description automatically generated

Confronting 20-Day Moving Average

The 20-Day MA at 2,041 is the first resistance level along with the downtrend line. If gold closes above the 20-Day line, it next needs to confront the recent swing high of 2,062 (C) and then the next higher swing high at 2,088 (A). Volatility should pick up soon as gold is approaching the apex of a symmetrical triangle where the two trendlines cross at 2,033. Moreover, the 20-Day and 50-Day MAs show a similar pattern of range compression. Low volatility is typically followed by an increase in volatility, which sets the stage for a breakout, either up or down soon.

Lower Price Levels if Gold to Falls Again

Gold has been trying to keep together its price structure for the uptrend. It has been threatened recently with the tests of support around the 50-Day MA and internal uptrend line. If yesterday’s low of 2,106 is broken to the downside gold will be back below the 50-Day line. If it stays there, a test the recent lows at 2,002 is likely and probably a drop to complete a falling ABCD pattern at 1,973 (D). Further down is an important support zone from 1,973 to 1,964 consisting of the 50% retracement and 200-Day MA, respectively. Additional evidence for that price zone is provided by the completion of an extended ABCD pattern at 1,967. The CD leg is derived by extended the AB leg by the 1.272% Fibonacci ratio.

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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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