The 50-day moving average shows that trend support was established around the swing decline of $3,121 from last week, indicating that the bearish correction might be nearing its end. The short-term upward trend remains intact as reflected in the 50-day line. This suggests that gold may continue to rise in price. While gold is currently above the 50-day, this outlook is maintained for the moment, although the future development is still uncertain.
Strong support has been shown
Since hitting a peak of $3,500 on April 22, gold has created a slight downward trend channel, taking shape as a Falling ABCD pattern that hit its first target at $3,140 last week. There is additional support forming around the 50-day line as well as near the lower edge of the uptrend channel, which is marked in blue. Both areas indicate potential support around the same price range.
A recent bearish pullback nearly tested this support line before buyers stepped back in. This proximity effectively validated the support at that trendline. The latest pullback came after an unsuccessful bullish breakout from the Rising Trend Channel. It’s not unusual to avoid testing support at the lower channel line. After this process wraps up, gold should be set to enter its next phase.
20-day MA resistance is a short-term important thing
The 20-day moving average represents crucial short-term resistance, having previously acted as support. At the start of May, a brief pullback found support around this line, subsequently followed by a bullish reversal. If gold stays below the 20-day average, it will likely face continued downward pressure. That said, there is potential for a rise towards the top of the declining trendline. The crossover of the two trendlines at $3,375 shows price levels near this downtrend, which is further backed by a 78.6% retracement near $3,371.
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