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Gold’s Retreat: Signs of Weakness Amidst Resistance Battle

November 17, 2023

NEW YORK (November 17) Following a rally to a new trend high of 1,993 earlier in the session, gold hits resistance and begins to sell off. It is on track to close weak, with a bearish daily candlestick pattern. Resistance was seen around last week’s high and noted yesterday as a possible resistance area. Today’s high broke a little above last week’s high but the breakout has clearly failed given the subsequent reaction. That poke above today’s high confirms an outside week for this week, where this week range encompasses last week’s full price range. On a shorter timeframe, it occurs as a broadening formation.

Bearish Candlestick Pattern Today

A bearish continuation will be triggered on a drop below today’s low, which is 1,979 at the time of this writing. Nonetheless, potential support areas include the uptrend line, and the 50-Day EMA, currently at 1,943. Other price areas to watch for support include a prior swing low at 1,970 and a swing high at 1,953. Each is marked with a solid black line on the chart.

Rally Back Above 1,988 Shows Strength

If a bearish continuation signal does not trigger, then watch for a possible attempt to go higher before a pullback. If gold can rally back to above yesterday’s high of 1,988 and stay above it, there is the capacity to keep rising thereby negating today’s signs of weakness. A similar switch occurred yesterday when gold reversed Wednesday weak performance and ending. However, a bearish signal never indicated further weakness never materialized.

50-Day EMA Support is Key

If gold continues to hold above its 50-Day EMA during weakness it continues to have a chance at new trend highs. The rising trendline can be used as a guide but the 50-Day line provides a more significant support area for the developing trend. Momentum off the recent 1,932 swing low has been healthy and is a bullish sign for the quality of the trend. Next, further follow-through is needed.

If a deeper retracement follows next week, finding support at the uptrend line would indicate greater strength than a decline below it. Moreover, given that this week is an outside week, gold may decide to again test lower levels and reach the bottom of the broadening formation.


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