Jump to content

Gold Price Forecast: Gold Recovery Builds Rising Wedge to Resistance


Recommended Posts

GOLD TALKING POINTS:

  • Gold prices have gained as much as 5% since hitting a fresh three-month-low in mid-May.
  • That recovery has been uneven, however, with buyers showing considerably more motivation around support or at lows than what’s shown at resistance. This has allowed for the build of a rising wedge pattern, often approached with the aim of bearish reversals. This combines with a key area of resistance on the chart that’s looked at below.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

Gold Price Futures (GC) Technical Analysis – Mixed Treasurys, Dollar Could  Fuel Two-Sided Trade

Gold bears came into the month of May with a full head of steam…

The setup had built through late-April trade. I had looked at a setup that showed Gold prices peering over the ledge ahead of the May open, and that hit in a big way as the month progressed. On May 9th I looked at another possible breakdown and that move hit aggressively in the week after, with Gold prices finally setting a fresh three-month-low at 1785 on May 16th.

But since that fresh low has printed Gold prices have been in recovery mode. This seems to go along with a number of other risk-sensitive themes, such as stocks clawing back prior losses. And, if you take all of this with context of the bigger-picture, it makes sense that what we’ve seen so far is corrective pullback and not necessarily trend-changing. Both stocks and Gold had become quite oversold last month and the pressure points that were driving the move saw some element of calm as there wasn’t major focus on Central Banks and a lessened level of focus on inflation.

But, those data points are coming back into the headlines this week as we have Central Bank rate decisions from Europe and Australia to go along with inflation data out of China and the United States. And then next week, of course, brings the FOMC into the mix for the June rate decision where they’re widely-expected to hike by 50 basis points. More pressing, however, will be the dot plot matrix where the Fed communicates their plans for the rest of the year. This is where some disagreement still exists, such as we saw last week with Lael Brainard talking about the September rate decision while markets have baked-in expectations for hikes in both June and July.

Where this is pertinent to Gold: That fundamental backdrop coincides with a possible reversal formation that’s built. That recovery in Gold has been uneven in the fact that buyers have been considerably more motivated at lows or near support than what’s shown at highs or near resistance. This shows the recovery in Gold taking on the form of a rising wedge, which is often approached with the aim of bearish reversals which, in this case, could keep the door open for a deeper bearish move.

GOLD FOUR-HOUR PRICE CHART

Gold four hour price chart

Chart prepared by James Stanley; Gold on Tradingview

GOLD LEVELS

The spot at which this formation is building is a key one. The level of 1881.30 is the 50% marker of the August 2020 – March 2021 major move. This was a pullback that’s defined the range that Gold prices have continued to hold in for more than a year since; and there’s been a number of inflections at these price levels as Gold has gyrated over the past year and change.

This level is also very nearby a prior swing-high from last November, which then became support in Q1 of this year. I’m tracking this zone from around 1879 up to that 1881 level, and this lower-high resistance keeps the door open for bears, particularly when taken with the shorter-term rising wedge formation looked at above.

GOLD WEEKLY PRICE CHART

Gold weekly price chart

Chart prepared by James Stanley; Gold on Tradingview

GOLD SHORTER-TERM

At this point we’ve already seen a reaction at resistance last week on Friday. After NFP, Gold prices put in a one-sided sell-off but didn’t quite print as a bearish engulf on the daily chart. And so far this week, bears haven’t yet been able to continue the move-lower, which does keep open the possibility of another probe at or around resistance before bears are able to take-control.

And I mention this due to timing… This week’s economic calendar is loaded with risk events pertinent to the inflation picture, with U.S. CPI set to be released on Friday ahead of next week’s FOMC rate decision. And also on this week’s calendar is an ECB rate decision on Thursday. Each of these high-impact events can bring volatility to Gold markets but they’re both more than a few days away.

For levels of note, there’s a batch of swing highs around the 1911 level and if bulls are able to pose a breach through that this week, the bearish theme won’t look so attractive any longer. This could be seen as an area of invalidation for bearish themes.

On a short-term basis, a breach of last Thursday’s support at 1846 opens the door for a move down to a bigger-picture support level at 1832. This is the same level that I was talking about last month which is the 38.2% Fibonacci retracement of the same major move looked at above. If sellers can test through 1831, the door opens for a larger downside move.

GOLD DAILY PRICE CHART

Gold Daily price chart

Chart prepared by James Stanley; Gold on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com. 6th June 2022

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • As the cryptocurrency space evolves, Bitget keeps bringing up worthwhile initiatives to make crypto trading interesting and easy for its users as well as helping them maximise profit.  Gleaning from the likes of Candybomb to PoolX and the likes, the CEX has been seen to steadily provide these services. The PRE MARKET trade seems to be the newest product on the block right now. It is an over the counter trading platform that specialises in providing a pre-traded marketplace for new coins before official listing.  Simply put, it is a p2p framework of some sort that facilitates trading between buyers and sellers enabling them to acquire coins at optimal price thus enhancing advance liquidity and complete delivery at a mutually agreed upon time.  The interesting thing about the Pre Market is that; it allows the advocates or supporters of newly launched projects to trade through a contract before the token goes mainstream or before being airdropped.  This framework is very good for projects that have very high speculation, speculative traders should check out this product.  Good thing is the Pre trade is already live, you can leverage on it to purchase $MERL before its official listing, you could get to earn massive ROI. Here's the link; https://www.bitget.com/pre-market/MERLUSDT
    • Atomic Wallet is experiencing issues with their staking and rewards, so I would like to transfer my ATOMs to another crypto wallet. I contacted Atomic Wallet Support and they recommended Cosmostation Wallet and gave me instructions on how to do this. I followed the links they sent me, which required me to fill in my seed phrase. My ATOMs transferred to Cosmostation Wallet but were immediately transferred out. I never made that transaction. I contacted Cosmostation Wallet Support and asked them what happened. They informed me that I must have been talking to a scammer posing as support from Atomic Wallet. I contacted Atomic Wallet and they said I wasn't talking to a scammer and those links are legit. I lost my funds because my PC must be infected. Atomic Wallet wouldn't outright scam me would they?  
    • With the recent surge in "Cat Coins," a wave of playfulness and intrigue is sweeping the crypto community. KHAI, a meme token built on the Solana blockchain, is at the forefront of this movement. Fueled by a bullish community sentiment, KHAI has experienced a staggering 15.27% price increase in the past 24 hours, pushing its market cap to a noteworthy 24.4 million dollars. This impressive growth comes on top of a remarkable 94.3% price jump over the past week, significantly outperforming both the global market and other Solana-based cryptocurrencies. Could KHAI be the next big memecoin to reach unprecedented heights? Its recent listing on the Bitget exchange, accompanied by a giveaway event, certainly adds fuel to the fire. However, the question remains: will this newfound attention propel KHAI to even greater heights, or will it succumb to the volatility often associated with memecoins? Only time will tell.
×
×
  • Create New...
us