The 4530-50 major support area did its job again. Gold tested it on Wednesday, bounced yesterday with a solid green candle, and is now at 4618. Every time price touches 4530-50, buyers step in. The support is real.
But here is the concern. Look at the volume bars on the chart. They are shrinking. Yesterday's bounce happened on low volume. A bounce without volume is a bounce without conviction. It could be short covering rather than fresh buying. We need follow through today to confirm this is more than a dead cat bounce off support.
#The chart:
The daily picture is clear. Price is respecting the range we have been tracking for weeks. The major support area at 4530-50 continues to hold. The bounce is happening. But the descending trendline (red) from the 4,892 high and the 4,590-4,650 zone are now the immediate resistance overhead.
Wednesday's low is the key level to watch. If price breaks below Wednesday's low on a daily close, this bounce is a failure and 4,497 (0.5 Fib) and 4,404 (0.618 Fib) become the next targets. As long as Wednesday's low holds, the range is alive and the bounce has room to run toward 4,650 and potentially 4,706 (0.236 Fib).
#Levels:
4706 -- 0.236 Fib / upper range resistance
4650 -- primary resistance / descending trendline area
4590 -- 0.382 Fib
4530-50 -- MAJOR SUPPORT. Held many times. Each test weakens it.
4497 -- 0.5 Fib. Next stop if support breaks.
4404 -- 0.618 Fib
#Today:
ISM Manufacturing PMI drops today. A reading below 50 signals manufacturing contraction. If the economy is contracting while inflation stays elevated at 3.3%, the stagflation narrative strengthens. That is a slow burn positive for gold, but not the kind of catalyst that breaks the range immediately. It builds the case for eventual rate cuts, which is what gold ultimately needs.
The support is holding. The bounce is in play. But volume needs to confirm. If today closes green with increasing volume above 4620, the short term recovery has legs toward 4650-4,700. If volume stays weak and price fades, we are just drifting inside the range waiting for the next trigger.
But here is the concern. Look at the volume bars on the chart. They are shrinking. Yesterday's bounce happened on low volume. A bounce without volume is a bounce without conviction. It could be short covering rather than fresh buying. We need follow through today to confirm this is more than a dead cat bounce off support.
#The chart:
The daily picture is clear. Price is respecting the range we have been tracking for weeks. The major support area at 4530-50 continues to hold. The bounce is happening. But the descending trendline (red) from the 4,892 high and the 4,590-4,650 zone are now the immediate resistance overhead.
Wednesday's low is the key level to watch. If price breaks below Wednesday's low on a daily close, this bounce is a failure and 4,497 (0.5 Fib) and 4,404 (0.618 Fib) become the next targets. As long as Wednesday's low holds, the range is alive and the bounce has room to run toward 4,650 and potentially 4,706 (0.236 Fib).
#Levels:
4706 -- 0.236 Fib / upper range resistance
4650 -- primary resistance / descending trendline area
4590 -- 0.382 Fib
4530-50 -- MAJOR SUPPORT. Held many times. Each test weakens it.
4497 -- 0.5 Fib. Next stop if support breaks.
4404 -- 0.618 Fib
#Today:
ISM Manufacturing PMI drops today. A reading below 50 signals manufacturing contraction. If the economy is contracting while inflation stays elevated at 3.3%, the stagflation narrative strengthens. That is a slow burn positive for gold, but not the kind of catalyst that breaks the range immediately. It builds the case for eventual rate cuts, which is what gold ultimately needs.
The support is holding. The bounce is in play. But volume needs to confirm. If today closes green with increasing volume above 4620, the short term recovery has legs toward 4650-4,700. If volume stays weak and price fades, we are just drifting inside the range waiting for the next trigger.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.