In yesterday’s educational post, I discussed why gold was falling despite sharply lower Treasury yields. Lower yields would typically provide support for a non-interest-bearing asset like gold. However, the dollar was mixed, and gold’s inability to reclaim its hourly moving averages kept the technical bias tilted toward the sellers. The fundamental expectation needed confirmation from the price action. It did not get it.
Today, that technical story continued with a break below $4,000 before buyers finally pushed back.
In today’s video, I walk through the chart, the sequence of breaks, and the levels that will help determine whether this rebound can develop into something more.
The moving averages told traders who was in control
Earlier this week (on Monday), gold fell back below its 100- and 200-hour moving averages (blue and green lines on the chart above) near $4,153 and stayed below.
That matters. When the price is below those moving averages, sellers have the stronger technical hand. A rally toward them gives buyers an opportunity to challenge that control, while giving sellers a level against which to define risk.
Yesterday, buyers had another shot. The rebound tested the moving-average resistance but could not sustain a break above it. The price rotated lower.
The sellers remained in control, and the next downside target came into focus.
Breaking $4,065.94 opened the door lower
The chart highlights repeated tests of support near $4,065.94 in the month of October including during the day yesterday. When that floor finally gave way, the selling accelerated.
The price moved through the $4,018.79 swing level, broke below the natural support at $4,000, and reached approximately $3,986 before bouncing.
This is why identifying targets ahead of time is useful. A break of support gives traders a reason to look toward the next area where buyers might respond. It also gives sellers a place to reassess after an extended move.
Today, buyers responded below $4,000 and pushed the price back above $4,018.79.
That is a constructive first step. There is still more work to do.
What needs to happen next?
For buyers, $4,018.79 becomes an initial barometer. Staying above that level would help the rebound build a base. The nearby $4,023.48 level is another hurdle, followed by the more important broken floor at $4,065.94.
Getting back above $4,065.94—and staying above—would take some of the pressure off and suggest the downside break is losing momentum.
Above that, the larger hurdles remain the falling hourly moving averages. On the supplied chart, those are approximately:
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100-hour moving average: $4,102.35
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200-hour moving average: $4,129.83
Until buyers reclaim those moving averages, sellers retain the stronger near-term technical position.
On the downside, a move back below $4,018.79 would put $4,000 and today’s low near $3,986 back in play. Below that low, the next swing support area comes between approximately $3,942.71 and $3,959.37.
Trade what the price is telling you
The rebound shows that buyers are willing to lean against lower levels. It does not yet establish that they have taken control.
For me, the process remains the same: define the bias, identify where that bias would be challenged, and know the next targets.
Sellers defended the moving averages. Support broke. Lower targets were reached. Now buyers have responded, and the technical levels give us a way to judge that response.
In today’s video, I take a closer look at those levels and what buyers need to do to turn a bounce into a stronger recovery.
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My analysis is that Gold is falling. What are other’s seeing?Where could XAUUSD go from here? Watch this week’s Exness Trade of the Week for the key market factors and possible scenarios.
This article was written by Greg Michalowski at investinglive.com.