Bear market continues below 2,287
Gold’s price support zone is from last week’s low near 2,287 to the previous swing low of 2,277 in early May. Given the recent bearish price action, including a drop below the 50-day moving average, a bearish rejection at resistance near the 50-day line yesterday, and the bearish trend continuation signal shown when gold fell below 2,315(B), the risk of a more severe retracement is increasing.
The bottom of the current support zone is at 2,277, so a decisive drop below that price level is needed to get a clear bearish continuation signal. A drop below 2,287 would indicate weakening, but not necessarily a sustainable breakdown, as support could still be found near the May swing low.
Lower target zone approaches trendline support
The next downside target area is near 2,252. That’s where the descending ABCD pattern completes. Both the AB and CD legs of the downside coincide with price movements at that target. This reflects price symmetry between the two swings. Symmetry identifies a potential important pivot. Still, a drop below 2,252 could lead to a test of support at lower levels. The downside is the price range from approximately 2,211 to 2,195.
That area was previously at the top of the trend and triggered a decisive breakout that pushed gold prices higher. Previous resistance areas tend to become support after pullbacks, and that is what could happen with gold. Approaching this lower price zone, a downward uptrend would be another indicator to watch, as it defines the lower parameter of an ascending parallel trend channel.
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