Gold’s Intriguing Reversal: Testing Support, Setting the Stage for a Possible Rally

Bruce Powers
Updated: Jun 29, 2023, 20:06 GMT+00:00

Key levels and signals in gold's uncertain path: Rebound, consolidation, or further downside?

Gold, FX Empire

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Gold Forecast Video for 30.06.23 by Bruce Powers

Gold fell to a new trend low before successfully testing the 200-Day EMA as support and turning higher. The low for Thursday is 1,893, while the 200-Day line is at 1,896. Gold snapped right off support around the line with little hesitation earlier in the session. It is set to complete the day as a bullish doji hammer candlestick pattern. However, a move above today’s high would be needed to trigger the pattern following the close.

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One Day Sentiment Flip

Today’s sharp bullish intraday reversal off a long-term trend indicator, such as the 200-Day EMA, is not too surprising given its significance and widespread usage. What happens next will be more useful to determine whether Thursday’s low completes the correction. The next indication supporting such a possibility will be on a daily close above today’s high of 1,913. More significant would then be a daily close above the five-day high of 1,937. That would also put gold back above the 100-Day EMA, as well as above this week’s high at 1,933.

Signs of Strength Needed

Nevertheless, a one-day bullish reaction may not follow through with additional signs of strength. Rather, a further test of lows and consolidation could develop. Of course, a decisive drop below today’s low is bearish and may lead to further downside. Falling below the 200-Day line briefly is one thing, but it is staying below it for multiple days that would be more bearish.

Prepare for Multiple Scenarios

The point being that we want to be prepared for multiple scenarios because we don’t know what is going to happen. Each scenario requires a signal from the behavior of price. Did a level get hit or not? Was the close (relative to your time frame) confirming a signal or not? Then we just execute the plan accordingly.

Since gold looks to be setting up for a potential rally into new historical highs, today’s low may be the low for many months (more than 12) if not longer. Nonetheless, the market doesn’t make it easy. Having a clear strategy and plan to cover a variety of scenarios helps to be prepared.

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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