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Gold’s Sharp Decline Triggers Bearish Signal, Eyes Lower Support Zones

By:
Bruce Powers
Published: Sep 27, 2023, 20:21 GMT+00:00

Gold is experiencing a rapid decline, breaching the August 21 swing low and triggering a new bearish signal.

Gold mine, FX Empire

In this article:

Gold Forecast Video for 28.09.23 by Bruce Powers

Gold accelerates its decline, falling sharply and breaking below the August 21 swing low thereby triggering a new bearish signal. It is set to close below that low and looks to be heading towards the next lower support zone. Selling pressure continues to dominate at the time of this writing as gold continues to trade near the lows of the day. It is currently down 1.4% for the day, which looks like the largest percentage decline since at least early June and was down as much as 1.6% at today’s low of 1.872.

A graph of stock market Description automatically generated

Monthly Bearish Signal Triggers

Today’s selloff also triggered a bearish signal on the monthly chart as gold fell below August’s low of 1,885. A break of the monthly level increases the chance for gold to reach lower potential support levels before bottoming and completing the current correction.

Fibonacci Confluence Marks Next Support Zone

The next lower price zone of interest is identified from Fibonacci confluence, where several price levels congregate from different measures. It runs from around 1,866 to 1,863 and includes the completion of a falling ABCD pattern extended by the 161.8% Fibonacci ratio at the low end of the range. If this range is exceeded to the downside, gold is likely falling to the next lower support zone as shown on the chart.

Measured Moves Confirm Price Zones

There are two measured moves marked on the chart. The shorter move is in red and the larger in purple. A range from 1,850 to 1,849 is the next lower price zone where support might be seen. The shorter measured move, and therefore more likely to be reached, completes in this next lower price zone. At 1,850 symmetry is represented between the two bear moves as the current decline, measured by the falling red line (2), matches the drop in the first move (1). Nevertheless, potential support zones just tell us to be on the lookout for a bullish reversal setup that may begin a rally.

Today’s Lows Sitting at Trendline Support

We will have to watch how price behaves once it reaches a price zone, and always be prepared for the unexpected. For example, Today’s low has stalled at the bottom trendline that starts from the June 29 swing low. It represents potential support as well. Although there are no signs of a reversal that could change quickly and lead to a bounce.

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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