Will the 20-day moving average support stay intact?
Up until now, support has been located near the day’s lowest point, but there is no indication of any strength that could result in a rally. Nevertheless, the day’s low is close to the potential support level that the 20-day MA indicates, which is currently at $3,028. If support around this line remains intact for 20 days, there is at least a chance of a rebound. Today was marked on March 12th, making this a test of primary support around the 20-day MA.
This initial test may lead to an inversion. However, if the line does not maintain its support, it will signal another bearish trend. The subsequent significant potential support level is slightly below the moving average at $2,999. This price range is based on the previous higher swing low and the 50% retracement levels. In addition, trend lines are ascending around that price zone.
Resistance remains at the top of the channels
Gold has recently struggled to surpass two upward-trending parallel channels. One is highlighted in a purple chart, while the other utilizes blue lines. The rally on Thursday initiated a new trend, with resistance noted on the fourth day near the upper line of the smaller blue channel. Furthermore, today’s decline has resulted in a clear breakdown above the purple channel line. A failure to break out from the channel’s upper boundary may ultimately lead to a test of support near the channel’s lower edge.
The risk of downturns is prevalent
Regardless of whether gold moves away or not, the likelihood of additional downside from the current position, indicated by signs of a bearish reversal from both channels, presents a negative risk. However, initially, gold must drop below the 20-day MA followed by a 50% retracement. It will then need to approach the $2,961 price level, which includes a 61.8% Fibonacci retracement. At that moment, gold fell beneath the rising trendline, bringing the $2,938 50-day MA closer with certainty. Ultimately, this week could conclude with a potentially bearish weekly shooting star pattern. A decline below $3,016 is necessary to activate the pattern.
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