Lower target beckons
There are some signs that gold could fall further before the correction is complete. As an example, we attempted a bullish breakout of the descending parallel trend channel on December 10th, but it quickly faltered, leading to a decline below the highest channel line.
A failed pattern can result in a sharp reversal in the opposite direction. Maybe that's what's happening with money right now. Since the bearish reversal originated from the top of the channel, the bottom of the channel may eventually become the target. This doesn't mean you'll reach your goal, but it does indicate that the seller may be in charge for a while.
signs of weakness
Notice that as gold fell from the 2,726 swing high (C), it fell below the 20-day moving average (purple). The intraday high then tested the 20-day line as resistance on Tuesday and Wednesday. Resistance was seen as the price rejected the area around the 20-day moving average to the downside. This is bearish action as it indicates that previous support has been confirmed as resistance. The bearish sentiment was then confirmed today as it tested resistance near the bottom of a small uptrend line starting from the 2,605 swing low.
Next target is 78.6% retracement at 2,576
The next lowest potential support level is near the 78.6% retracement at 2,576. However, as mentioned above, if the trend channel remains active, we can easily test the latest swing low at 2,537 (B) again. If the decline cannot be stopped at that price range, the next low price range, around 2,473, will be the target. This price level is a 61.8% Fibonacci retracement of the bull market that started from the May swing low. This also includes a target at 2,475, which is a descending ABCD pattern.
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