Gold Technical Forecast - Is the bearish phase out of the picture?

Tigerwit Africa

en English

Gold Technical Forecast – Is the bearish phase really out of the picture?

Share on facebook
Share on whatsapp
Share on twitter
Share on linkedin
Share on skype

Gold fell sharply on Monday toward the 1845-1850 support zone. Technically, can we say the bullish push from 1760 has signaled the end of the bearish phase?

Gold is an interesting asset. Many times, it exhibits a safe-haven nature just like we saw when the pandemic was strong in the first half of the year. The commodity rose to its all-time high in August, touching $2,075 per ounce. However, sometimes, it comes out as a half risk-on industrial metal. Since March, most of the risk-off instruments have plunged while Gold, though didn’t make sustained net gains, has restrained from further plunges.

In fact, despite the vaccines news pressurizing the precious asset in November/December, it’s breaking even since November 1. This is to show that Gold is a very good long-term asset to purchase as it has been able to weather the storm during its bad times. In fact, the long-term forecast has 2250 or higher in view. However, the question now is this – has the bearish phase since August really ended?

Gold technical analysis – long-term outlook

The weekly chart above shows that Gold is clearly in a bullish trend from 1160. The dip from 2072 has endured since August. However, there is a perception that the dip is quite shallow compared to the trend that preceded it. At least 38.2% Fibonacci retracement level at 1722 is the ideal target for this dip. However, although more than 70% of the time, corrections get to 38.2% or more of the trend, the other 30% or less probability could play out here. If that is the case, Gold should break significantly above the channel and above 1922 previous all-time high to give us a bit of confirmation that the phase has ended.

In my opinion, using momentum analysis, the weekly RSI, which has been very helpful with identifying important support, is yet to cross to the oversold region. This shows Gold bears are still around and the bearish phase might continue to 1722. Let’s get it down to the hourly chart.

Gold H4 Technical Analysis

The bearish corrective pattern from 2072 is still in play. Within this bearish phase, we have had two bullish corrective patterns (triangle and zigzag). After each of them, Gold fell sharply to a new near-term low. The current rally also looks corrective in the manner of the previous two. Will there be another bearish move? Most likely! Aside that the rally from 1762 is corrective, the RSI momentum analysis also plays a vital role once again.

On the H4 chart, within this bearish phase, the RSI overbought zone has been 100% accurate with identifying when the next dip is coming. Currently, the indicator is returning from another overbought zone with a price-momentum divergence. Unless a sharp push above 1922 happens, Gold should fall again to a new multi-months low.

On the intraday level, as the 15 Min chart above shows, the market is currently retracing its step following a massive Monday fall after the UK Covid report. We can expect it to continue to 1885-1890 before the bearish move continues as expected. This forecast will become invalid if the price breaks above the 1907 high.

Disclaimer: This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This communication has been prepared based upon information, including market prices, data, and other information, believed to be reliable; however, TigerWit does not warrant its completeness or accuracy. Trading CFDs involve risk and can result in loss of capital.

Sign up for our Newsletter