FX.co ★ XAU/USD, GOLD

Earlier in Wednesday's session, gold surged into resistance, hitting a new rebound high of $4,382 before running into neighboring resistance. Rather than establishing a breakout, the advance eventually reaffirmed the above supply after testing previous support positions as resistance. In particular, the run higher stalled close to the 20-day moving average at $4,390 and the previous swing low of $4,366, which now serves as resistance. This was the second recent instance of a short-term rise failing close to the 20-day average, indicating that price activity is still dominated by the downtrend. If accurate, there might be another challenge of support close to recent lows soon. Wednesday produced a bearish outside-day reversal pattern, with a low of $4,227 as of this writing. However, price action is still close to the session lows and could make a new low prior to the close. But trade is still close to lows, and before the session concludes, a new low can be struck. The decline's overall integrity was maintained because resistance was observed close to the first, more important price zone. It creates a crucial barrier that needs to be overcome before greater costs can be pursued. As the 20-day moving average declines, it will eventually form a dynamic resistance zone that is increasingly lower, strengthening the bearish pattern. The low of an initial support range was represented by the corrective low, which was $4,023 from the previous week. Therefore, before any significant bullish change can be verified, indications of support should be seen, followed by unmistakable proof of strong demand forming above that level. It would be a bearish indication if it didn't. If not, a possible support zone is defined by the long-term uptrend line. The next lower dynamic trend signal is the lower uptrend line because the long-term 200-day moving average broke as support during the decline. There is a potentially important resistance zone a little higher, beginning around the 200-day moving average near $4,462 and climbing to the 50-day moving average around $4,563, assuming gold can eventually recover the 20-day moving average and Wednesday's high. Its potential significance is further enhanced by the fact that both an uptrend line and a downtrend line intersect inside that price range. This convergence of resistance levels is noteworthy because it is consistent with the more general bearish scenario that was first described, in which rallies continue to stall below important moving averages and previous structural support that has become resistance. On Thursday, gold continued to drop, setting a lower daily high of $4,330 and a lower low of $4,201. Following a notable breakthrough below the 200-day moving average and uptrend line on June 5, this bearish reaction comes after the first pullback to test resistance. Wednesday's high of $4,382 served as resistance, sparking a one-day negative reversal day that continued on Thursday to complete a 50% retracement of the previous rally at $4,207. The 61.8% Fibonacci retracement of the previous rise at $4,164 and the 78.6% Fibonacci retracement at $4,102 become the next downside targets if Thursday's bottom fails as support. Numerous additional signs that demonstrate support in that area support that lower level. Given this price behavior, it is evident that gold is still in a downtrend structure, with sellers maintaining overall control. However, buyers regained control and pulled the price back up after the current lower swing low of $4,023 just momentarily fell below the previous swing low of $4,098. The midline of a falling trend channel, the 61.8% Fibonacci retracement of the previous advance, the completion of a 100% projected target for a falling pattern, or bearish measured moves are some of the signs that validate the support zone. This week's lower swing high of $4,382 is now important resistance since a return to that level would indicate a reversal of the bullish trend and a recovery of the 20-day moving average, which is currently at $4,374 and declining. The 200-day moving average at $4,465 and the 50-day moving average at $4,552 are two more potential resistance zones that a rally over that high will soon reach.