Resistance is again seen at the 20-day moving average
Looking ahead to next week, unless gold can break above this week’s high of 2,340, prices will likely fall. The 20-day moving average fell below the 50-day moving average three weeks ago, signaling a bearish trend. Additionally, the 50-day moving average has acted as resistance all week, and today’s downside reaction further supports that resistance. Both moving averages are sloping downwards.
The May 3 swing high of 2,277 is a key price level that creates an uptrend price structure of higher swing lows and higher swing highs. A fall below this level and a subsequent daily close below this level would confirm a bullish trend reversal.
Risk of collapse from the top of the integration
The 61.8% Fib retracement is at 2,262, and support may be found within this price range. However, a drop below 2,277 would trigger a breakdown of the roughly 8-week consolidation upper limit. This could accelerate the gold price downwards towards the next lower target zone near the previous swing high at 2,212. Note that there is also an uptrend line around the support zone.
`Weekly bullish signal above 2,340
Despite the bearish indications of today’s failed rally, nothing is certain until further signals confirm the weakness or point to strength. A rise above today’s high of 2,340 would indicate strength and take gold above its 50-day moving average, which is currently at 2,337. This week is expected to end with a weekly high of 2,340 and a low of 2,294. Hence, a breakout above today’s high would also trigger a bullish reversal for the week. The two-week high would be 2,369, which would be the next potential weekly resistance zone.
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