Gold’s Current Correction: Implications for Future Trends and Support Levels
Gold Forecast Video for 26.05.23 by Bruce Powers
Gold further retraces its prior advance, falling to a low of 1,939 on Thursday. That low put gold down 6.8% from the record high of 2,082 reached several weeks ago. A 50% retracement completed at 1,944. Lower down is a weekly low at 2,034 and the 100-Day EMA at 1,934.
Gold Should Confirm Support of the 100-Day EMA
This is the second approach to the 100-Day line to test it as support since gold went above it in November. It represents an important area of support as it is close to the trend line at the low end of a rising parallel trend channel. The most recent test of the 100-Day line occurred in February and March and ended with a double bottom. Gold fell a little below the line with each bottom and closed below it on a daily basis for four days. How it behaves this time relative to the 100-Day EMA and the prior test will be telling. If prices fall further below the line than last time, it shows relative weakness. Nevertheless, strong support should be seen around the uptrend line and the 100-Day EMA.
Rising Bullish Trend Channel Plays Out
It does not look like the trendline will be hit today. Tomorrow, the line will be around 1,928, and on Monday it will be around 1,932. A daily close below either the 100-Day line or the uptrend line is a bearish sign. What happens next though will be important to determine with it get more bearish or turns bullish. Does price stay about the line or are there signs that support is holding, enough for price to rally off the level?
Next Chance at Lower Prices Before Bullish Reversal
This current correction in gold may provide the lowest prices before a bullish reversal and eventual attempt at reaching new trend highs over the coming months. The 100-Day EMA is a long-term trend indicator, and it represents critical support. When combined with the uptrend line it takes on an even greater potential significance. The well-formed uptrend is expected to continue to evolve higher once the current retracement is complete. There have been two legs (swings) up in the uptrend so far and three would also be common.
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