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Gold’s Bearish Reversal: Can It Find Support at the 200-Day EMA?

By:
Bruce Powers
Published: Sep 21, 2023, 20:07 GMT+00:00

Gold's recent decline follows resistance, with the 200-Day EMA at 1,911 emerging as a crucial support level. The breach of the 61.8% Fibonacci retracement adds uncertainty.

Gold bullion, FX Empire

In this article:

Gold Forecast Video for 22.09.23 by Bruce Powers

Gold continues to fall today following yesterday’s one-day bearish reversal. Yesterday’s high reached a marked target zone. Once reached resistance kicked in and gold pulled back before accelerating to the downside following the U.S. Federal Reserve release. Today, it continued lower but has come a bit off the bottom at the time of this writing.

A graph with lines and numbers Description automatically generated with medium confidence

200-Day EMA Next Support at 1,911

The next key support level is around the 200-Day EMA at 1,911. It was almost reached today as the day’s low was 1,914. During the decline the 61.8% Fibonacci retracement of 1,919 was exceeded to the downside. This puts the 78.6% retracement at 1,911 in sight. Of course, that is the same price level as the 200-Day line thereby making it even more potentially significant to watch for bullish signs if it is reached.

Two indicators pointing to the same or a similar price level generally strengthen the potential significance of the level. In the case of gold, this would mean that the 1,911 should see strong support. If it does not and rather the price of gold continues to fall the 1,901-swing low could be at risk of being broken to the downside.

Weekly Pattern Shows Weakening

A bullish breakout of a weekly bullish hammer chart occurred earlier this week. Currently, the weekly pattern shows a bearish inverted hammer with price within last week’s range. In other words, a breakout above last week’s high of 1,931 high occurred, but strength from buyers started to taper off to the point where gold may not close the week above last week’s high.

A weekly close above last week’s high is needed to confirm the strength shown in the breakout. If that doesn’t happen, the breakout remains prone to failure. There are two trading days remaining to the week, so we will be watching the weekly close carefully to see where it is within the week’s range as well as relative to last week’s high.

For a look at all of today’s economic events, check out our economic calendar.

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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