Gold is potentially in a downtrend after a massive daily rejection from the $2720 zone. This impulsive rejection marks the possibility of structural shift in the market, with a lower high being set in right after November 14th’s lower low around $2,550.

Looking at other indicators, we see the Exponential Moving Average-20, marked by the orange line in the chart, acting as a decent support for the uptrend of Gold from September to October. By applying it as the midline within a Bollinger Bands® – with standard deviation set to 1, we’re also able to filter out false signals whenever the price breaks the EMA-20.

Notice how in the Gold (XAU/USD) chart, Gold broke the Daily EMA-20 late November, only to be rejected by the top of the Outer Bands. This helps add validity that Gold is currently in a downtrend.

Prices to Watch

Bottom Line

If Gold cannot break above $2720 to change the market structure, then we may continue in this downtrend for the rest of December. The highs and lows in the chart also mark out a potential Falling Wedge pattern, which could bring us to as low as ~$2480 before a major bounce occurs.

Should the price of gold creep higher, the Sep 2024 Resistance Zone ($2668 – $2682) serves as an excellent price zone to watch for a short position. It also aligns with the top of the Bollinger Bands, and the 61.8% Golden Fib Retracement Level.

Alternatively, should Gold close above the Sep 2024 Resistance, hold the price zone, and come back for a retest – we may see further continuation to the upside. This scenario marks a possible retest of the upper trendline, but note that it would also invalidate the Falling Wedge, as there was no 5 wave consolidation within the pattern.

In such a scenario, the $2720 price level and the All-Time Highs at $2790 would serve as resistance zones to test Gold’s ability to move even higher.

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