Fibonacci Confluence Zone in Focus
Nearby targets start with a 127.2% Fibonacci retracement of the prior advance at $3,927, followed by a swing low from October at $3,886. Additionally, the midline of the descending trend channel cuts through those levels. The midline was just recently tested as support, resulting in a bounce and lower swing high. Its location adds to the potential significance of the support zone from $3,927 to $3,886.
Lower Extension Risk Still in Play
Nevertheless, a bounce from that zone may lead to a setup for a bearish continuation to the next lower 78.6% Fibonacci retracement target of $3,650. The parameters of the falling channel would also suggest that target zone could be reached. One thing is relatively clear. If gold stays below the uptrend line, it remains prone to further declines. Bearish implications from the break below the 200-day moving average in early June have come to pass and the new trendline break signals suggests a continuation of the overall bearish trend.
Resistance Thresholds Define Next Move
However, as noted above, a decisive advance above Wednesday’s high of $4,115 would trigger a daily reversal and recovery of the trendline. Trend resistance near the 20-day moving average, now near $4,248 would then be next in line to be tested as resistance. It is a potential upside barrier confirmed twice during the last two advances. Therefore, a reclaim of that average would provide the first indication that gold may continue to rise from there.
Trendline Boundary Remains the Decisive Line
Ultimately, price action remains defined by the trendline boundary: sustained trading below it keeps the bearish channel intact, while a breakout above it would shift momentum back toward a broader recovery phase.
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