Daily Price Action
Shares

Gold: Not a Good Time to Be Bullish

Shares

Important: I use New York close charts so that each day closes at 5 pm EST.

Click here to get access to the same charts I use.

It seems gold may be heading lower next week after all. I mentioned gains might be limited this past Monday due to a confluence of resistance near 1235.

Sure enough, the 1235 resistance area held up all week. Then on Wednesday, sellers decided to take the market lower and never looked back.

You may recall the other key level from Monday’s post was 1215. It’s the horizontal level that allowed buyers to extend gains in mid-October.

The 1215 level also held up last week during the rather aggressive October 31st retest and subsequent November 1st bounce.

But all that changed with yesterday’s close. Friday’s final print of 1209 puts gold below the 1215 key level. That means any retest of this area early next week will likely attract an influx of selling pressure.

Not only that, but the market edged closer to ascending channel support that extends from the year-to-date low. I pointed out this pattern on Monday.

But here’s the question that should be on everyone’s mind:

Is this short-term ascending channel something more significant and telling? Perhaps a bearish flag pattern?

It would be difficult to argue that it isn’t. A look at the price action since April shows a gold market that’s well off its year-to-date high.

Furthermore, July’s move below 1235 took out the December 2017 swing low. That’s significant because, before that move below 1235, gold had been trending higher since December 2016.

In other words, July’s plunge took out a multi-year uptrend.

Throw this latest ascending channel into the mix, and you have a bearish recipe that’s impossible to ignore.

As for next week, sellers will likely look to defend 1215 as new resistance. But in order to see gold much lower, bears will need to take out channel support near 1200 on a daily closing basis.

This is when it’s crucial that you’re using a New York close chart like the ones offered here. Otherwise, you’re opening yourself up to false breakouts.

Now, if buyers beat the odds and secure a daily close back above 1215, we could see gold march higher toward 1235 resistance. That isn’t the base case in my view though.

The most likely scenario, in my opinion, is a decline to channel support near 1200. A daily close below that would open up the October lows at 1180 followed by the year-to-date low at 1160.

I’ll be keeping a close eye on gold as the price action within this channel unfolds. If the market treats this as a continuation pattern, the objective would be, well, a very long way down.

More to come next week. Enjoy your weekend.

Advanced Forex Webinar: The 7 Secrets of Consistent Forex Profits

Click Here to Register

Gold channel on daily time frame

Leave a Comment:

15 comments
Abdus Salam says

Good a day sir….i am happy to read your study& opinion. Have you think gold touch the support level for the next week? Thanks

Reply
    Justin Bennett says

    We’ll have to wait and see. I don’t try to predict when something will happen.

    Reply
Ravi says

Thank you Sir… for your kind analysis…..

Reply
    Justin Bennett says

    You’re welcome. Enjoy your weekend.

    Reply
Ravi says

Sir…as per the D1 whatever you said is true…..in other way round… in H4….it is in Descending channel and it is already touched the channel support line….i hope the market may turn to bullish from current price because same thing happen during 31st Oct’18…

Reply
    Justin Bennett says

    The broader trend and larger pattern take precedence. At least that’s how I’ve always approached things.

    Reply
Gabriel Odok says

Justin! You are just the best. You have really broaden my understanding of the Forex market.

Reply
    Justin Bennett says

    Cheers, Gabriel. Broaden and simplify at the same time – that’s what I aim to do. 🙂

    Reply
orachun thailand says

good sir.

Reply
Lin Oo says

Justin! Great Thanks.

Reply
    Justin Bennett says

    You’re welcome, Lin.

    Reply
uchechukwu says

great article Justin,i am a fan.

Reply
    Justin Bennett says

    Thanks. Glad you liked it.

    Reply
Edrine says

l have always liked what you analyze, l use trendline breakouts but we are ever speaking almost the same language, thanks Justin

Reply
    Justin Bennett says

    You’re welcome, Edrine. That’s an excellent way to use trend lines. Simple is better. 🙂

    Reply
Add Your Reply