Gold’s Price Rebound: Testing Support Signals Potential Upswing

Bruce Powers
Published: Aug 25, 2023, 20:27 GMT+00:00

Successful support confirmation strengthens gold's bullish outlook.

Gold, FX Empire

In this article:

Gold Forecast Video for 28.08.23 by Bruce Powers

Gold pulled back to below the 200-Day EMA earlier in the session before finding support around 1,904. That low completed a 50% retracement of the recent advance. Subsequently, demand picked up to lift the precious metal back above its 200-Day line, which is now at 1,908. Such an undercut of the 200-Day line followed by a rally back above it shows a successful test of the line as support. Additional confirmation of strength is now needed to support a bullish scenario given the likely bottom that was established last week with a low of 1,085.

A graph of stock market Description automatically generated

False Breakdown Followed by Swift Recovery

Such behavior of price in a developing uptrend is typical. The 200-Day EMA was resistance until Wednesday when gold rallied back above the line and closed above it. At that point it became possible support. That support was confirmed today. Even though gold dropped below the line briefly, prices quickly recovered, indicating a false breakdown.

Bullish Continuation on Rise Above 1,923

Next, for a bullish continuation we want to see a rally above today’s high of 1,922, followed by an advance above this week’s high of 1,923. Once confirmed with daily close above 1,922 the rally is set to continue higher. Notice that the 34-Day EMA (orange) marks resistance at the high of the current advance and it has converged with the 38.2% Fibonacci level.

Initial Target Zones

The first higher target zone is around the 50% retracement at 1,936, followed by the 61.8% Fibonacci retracement and prior weekly high at 1,948. Gold will have to break through the downtrend line to get to the 61.8% level. A daily close above the downtrend line will provide additional evidence that the price of gold is strengthening.

New Uptrend Shows Adjusted Slope of Uptrend

A new uptrend line has been added to the chart to incorporate the recent swing low. It shows a new trajectory for the uptrend and a line of dynamic support. Although support was seen today at the 50% retracement level, as it led to a decent bounce, a deeper retracement may still occur. If so, the 61.8% Fibonacci level around 1,900 would be the next lower price area to watch for a support and subsequent bullish reversal.

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.

Did you find this article useful?