Gold Uptrend in DangerGold is approaching a potentially important moment that could either reinforce the bullish trend or set the stage for a corrective move lower, pushing back towards the intersection of long-running uptrend support and minor horizontal support at $4060.
Twice last week, the price tested this support zone only to bounce strongly, including last Friday when a hammer candle printed on the daily chart. That only reinforces its importance. However, with a three-candle evening star forming if Monday’s candle finishes near current levels, and with RSI (14) and MACD pointing to rapidly diminishing upside strength, directional risks are shifting quickly lower. A break beneath the uptrend, especially on a close, may signal gold has begun a new trend, putting downside levels in play.
If a bearish break occurs, traders could sell with a tight stop above the uptrend to protect against reversal, targeting the psychologically important $4000 level initially. If that gives way, $3950 and $3895 are other nearby support levels, providing multiple target options depending on desired risk/reward.
Alternatively, if the support zone continues to hold, the setup could be flipped with longs established above the trendline and a stop below for protection. $4100 has seen some action recently over shorter timeframes, as have $4155 and $4180. All screen as possible targets.
Good luck!
DS
