Bottom line: Gold bearish structure remains intact until prices stay below the $1703.00 resistance. Bears are expected to regain control as a lower high might be in place at $1644/45
Technical Analysis:
Gold might be inclined to resume lower after having carved a lower high at $1644/45 levels last week. It could act as a potential resistance as the yellow metal progresses lower towards $1300, in the next several trading sessions. Gold might push higher from here but remains bearish until $1703 resistance is intact.
After rallying for over 10 months since May 2019, Gold might have finally carved a major top at $1703 and should be looking to print lower lows and lower highs, going forward. Also note that the multiyear counter trend rally that had begun from $1046 levels in December 2015 might be complete at $1703. If the above structure holds, the trend should turn lower from here and drag prices towards $1300 levels as initial target.
Furthermore, the recent drop between $1703 and $1450 has been retraced just above the fibonacci 0.618 levels. Gold is expected to face resistance around the $1620/25 zone and reverse lower as potential Wave 3 resumes. Please note that interim support is seen at $1450 while potential resistance stays at $1640/45 respectively.
Most traders might be willing to initiate fresh short positions around current price ($1615/25) with protective stop above $1703 and projected targets below $1300 levels respectively. A break below $1450 would accelerate downside as bears regain full control there. Even a drop below $1540 would be seen as constructive for bears as support trend line breaks.
Alternately, if Gold breaks above the $1644/45 mark, it could test up to $1649 levels, which is fibonacci 0.786 retracement of the earlier drop as discussed above. Either way, a bearish reversal is due until prices stay below $1703.00.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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