I wrote about the spot price of gold in the Weekly Market Insight and highlighted a possible continuation to the downside for the precious metal this week until around the $1,900 neighbourhood. As you can see, the price has indeed dropped and touched gloves with $1,900.
Why I was eyeing lower levels is technically simple: there was scope to press lower on the weekly, daily and H1 timeframes. And why do I believe buyers are attempting to make a show from the $1,900 area? Again, it’s technically simple: major support is present around this area with room to navigate higher levels. Nothing more, nothing less.
The weekly timeframe shows price action recently dropped in on support from $1,898, a level sharing chart space closely with a descending resistance-turned-support level taken from the high of $2,070. Adding weight to this support is the daily timeframe’s 200-day simple moving average at $1,902. This dynamic value, alongside being used for trend identification (it currently indicates the trend remains higher in the longer term for now), often delivers support and resistance when tested (some traders and investors use this value to trade mean-reversion strategies).
Finally, on the H1 timeframe, I noted the following in recent writing:
Out of the H1 chart, limited support is visible until around $1,900 (not shown on the H1), which conveniently aligns with the 200-day simple moving average on the daily scale and support on the weekly and daily timeframes ($1,898 and $1,895). However, you may also acknowledge that downside momentum has noticeably slowed, compressing between two converging descending lines (drawn from $1,972 and $1,943) to form what is referred to as a falling wedge pattern: a potential bullish reversal formation.
As evident from the H1 space, we have recoiled from $1,900 and are now seeing price attempting to break beyond the upper limit of the falling wedge formation. A decisive close beyond here, in addition to the support seen on the weekly and daily timeframes, would be considered a bullish signal—at least in the short term—and potentially see the yellow metal home in on daily resistance from $1,919.
Charts: TradingView
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With over a decade’s experience as a finance writer, Elizabeth Anderson applies her knowledge and experience to keep a finger on the pulse of global trends. Specialising in forex, cryptocurrencies, and stocks, Elizabeth follows the movements that impact the world of trading.
