Earlier today, the price of gold dropped below Monday’s low of 2,285 but then found support around 2,282 and went up again. There was a pattern called a bear flag, which is a signal that the price might go down further. Yesterday, gold closed below a previous low point at 2,291, confirming this signal. Now, we’re waiting to see if gold can keep going up after today’s bounce, especially since it’s testing Monday’s low as a point where it might stop going up.
When there’s a bearish trend like this, it’s common for previous points of support to become points of resistance as the price drops. Unless gold goes above Tuesday’s high of 2,236, it’s expected to keep going down.
Next Lower Target Zone Starts at 2,261
So, about half of the movement downwards has already happened, which means we might be heading towards the next level where the price could find support. This next level is estimated to be between 2,261 and 2,255, where two different calculations based on previous movements line up.
There’s another estimate based on the bearish signal we talked about earlier, which suggests the price might go down to around 2,238 initially. Considering how quickly the price dropped after the signal on Monday, there’s a decent chance it might reach this level eventually.
50-Day Moving Average May Yet be Tested as Support
If the price of gold continues to drop, there’s another important area we need to watch out for. It starts with a line called the 50-Day Moving Average, which is currently around 2,232. Then, there’s a range between two levels based on some math called Fibonacci calculations, which is between 2,212 and 2,208. This range is important because it’s halfway between the lowest point gold reached in February and where it might end up next. It also marks the end of a pattern called a falling ABCD.
So, there’s a chance that gold might test this zone of potential support before it starts going up again.
Bearish Close for April
Still, let’s not forget about the support level from last month, which was at 2,228. If the price falls below this level, it could be a sign that things are getting weaker. How significant this is will depend on what happens next. If the price quickly goes back up above the low from April, it might not be a big deal. But if it keeps dropping, it could mean a bigger pullback.
April didn’t end on a strong note. It closed towards the lower end of the range of prices seen throughout the month, and there was a pattern called a bearish shooting star. However, as I mentioned earlier, there’s that line called the 50-Day Moving Average and a support zone based on Fibonacci calculations on the daily chart, and they’re below the low from April. This suggests that if the price does drop below April’s low, it might find some support not too far down.
