Gold’s Price Soars to Trend High Before Bearish Turn

Bruce Powers
Published: Mar 21, 2023, 19:25 UTC

Gold's bullish pattern and recovery off recent lows suggests that the potential for a record high breakout may be on the horizon.

Gold, FX Empire

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Gold Forecast Video for 22.03.23 by Bruce Powers

Gold triggers a bearish shooting star daily candlestick pattern on Tuesday on a drop below 1,966. This follows an advance to a 2,010 trend high on Monday. The 14-Day RSI was overbought yesterday but has since turned back down below the 70 level.

Chart, histogram Description automatically generated

Monday’s high was a trend high that completed an 11.4% advance off the most recent swing low at 1,805. That low and the subsequent second low at 1,812 created a double bottom right on support of the 200-Day EMA. The trend high was just shy of an 88.6% Fibonacci retracement of the downtrend begun off the March 2022 high at 2,070. Getting that high shows strength and that the price of gold may be getting ahead of itself.

Gold’s Behavior During Retracement May Leave Clues for What’s Next

No doubt that gold has seen a strong recovery off the 200-Day EMA area. How it behaves during the retracement will be telling as to whether underlying strength can remain till a bullish continuation or whether gold moves into a longer and deeper retracement or consolidation before making another attempt to get back to historical highs.

Gold’s Move Higher Attempting Test of Previous Record Highs

Back in August 2020 gold made a new historical high of 2,031 before moving into a 19-month correction. That high was eventually exceeded with a new high of 2,070 reached in March 2022. Subsequently, gold moved into a correction that bottomed 22% lower at 1,615 six months later. As of yesterday’s high, gold was up 24.5% above that low, and only 3% below the record high and 1% below the first high hit in 2020.

Large Bullish Basing Pattern

The larger pattern in gold shows a large, greater than 10-year cup with handle basing pattern. This is a bullish pattern that should help propel gold to record highs once a breakout occurs. A breakout is indicated on a move above the 2070 record high. It’s possible that the recent test of support at the 200-Day EMA is the lowest swing low for gold before a breakout occurs.

The 38.2% Fibonacci retracement at 1,933 is the first area to watch for a possible bullish reversal either for a tradeable bounce or a continuation of the uptrend. It hasn’t quite been reached at the time of this writing.

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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