Surging Gold: Failed Bearish Signal Sparks Strongest Rally Since October

Gold Forecast Video for 14.12.23 by Bruce Powers

Following a false bearish signal gold manages to trigger a bullish reversal with strong follow through. The reaction off the bottom points to the likely completion of the current retracement. A bearish continuation signal was triggered initially with a drop below the prior retracement low of 1,976. Subsequently, support was seen relatively quickly at 1,973, leading to a mild bounce. Once the U.S. Federal Reserve released their press release leaning towards easing, gold took off to surpass the three-day high of 2,008. It is trading at the highs of the day at the time of this writing.

Retracements To Be Watched Carefully

Given today’s bullish price action, investors and traders will be watching retracements carefully for new entry setups. This new rally in gold, assuming it is sustained, has the potential to eventually breakout to new record highs. Notice that potential support at the prior swing high of 2,009 was quickly surpassed, reflecting strong demand today.

Possible Resistance Areas

Areas to watch for potential resistance begin with the December 7 minor swing high at 2,040. That is followed by another relatively minor swing high at 2,052. A weekly high and prior swing high is then at 2,070 to 2,075. Higher up is the May swing high at 2,082. These price levels can be taken together and watched as a possible resistance zone from around 2,070 to 2,082.

Bullish Signs Point to Higher Prices

The fact that a new trend low was triggered before today’s rally is bullish. It shows a failed bearish trend continuation, and it reversed with enthusiasm. Today’s advance is the strongest seen in gold since October 13. Frequently, failed moves lead to sharp moves in the opposite direction. We may be seeing the early stages of that dynamic today. One word of caution though. Since upward momentum is starting off today’s low, strong demand may not be able to sustain itself into new record highs without at least a short pullback or consolidation phase first. Even if the 2,135-record high is approached soon, will demand in gold be strong enough to keep rising once reaching new highs. We will be watching closely.