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Gold’s Consolidation Battle: Will It Break the Uptrend or Fall into Bearish Territory?

By:
Bruce Powers
Published: Jun 8, 2023, 20:18 GMT+00:00

A battle is underway in the gold market as it struggles to break the long-term uptrend or succumb to further bearish pressure. The 100-Day EMA holds the key.

Gold, FX Empire

In this article:

Gold Forecast Video for 09.06.23 by Bruce Powers

Gold stays stuck inside consolidation as today’s price action is largely contained within the trading range from Wednesday. Again, today resistance was tested around the 34-Day EMA with a daily high of 1,970, while support around 100-Day EMA was tested with today’s low of 1,940. Consequently, gold needs to break through either the 34-Day line for a bullish sign, now around 1,972, or the 100-Day line for a bearish signal, currently at 1,938.

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Recent Price Action Triggers Uncertainty

Most of the price action over the past four days has occurred below the long-term uptrend line, which also acts as resistance currently. Note the series of higher daily highs the line up under the line. By itself this is bearish price behavior. However, given that the other long-term trend indicator, the 100-Day EMA, is nearby,

Gold Has a Relationship with the 100-Day EMA

Gold’s relationship with the 100-Day EMA is significant as it has clearly been recognized by the market since the November bottom (1). For over six months prior to November gold had been trading below the 100-Day line. It broke above it in November, quickly tested it as support, and then took off higher. The 1,960 peak was reached at the beginning of February leading to a correction.

That correction tested the 100-Day line as support and price dropped below it twice thereby creating a double bottom that gave a bullish breakout signal on March 10. There is also a consolidation pattern currently forming at the low of the trend and around the 100-Day EMA, although this time at support of the line rather than below it.

Bear Trend Continuation Below 1,932

A drop below the current trend low of 1,932 triggers a continuation of the bear trend. The next lower target would then be 1,925, which is the completion of a declining ABCD pattern. Further down is the 61.8% Fibonacci retracement at 1,912. If gold does fall to a new trend low, how long it stays there and the time to recovery to get back above the trendline and 100-Day line will provide clues for wht might be coming next.

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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