Gold Rebounds from Key Support: Eyes Set on Resistance
05 September 2024
On Monday, I highlighted a potential short-term bearish opportunity for gold as it approached long-term highs, struggling to break above them. That analysis played out well, as we saw the price pull back to test the orange horizontal support at $2,480 per ounce. This level has proven to be a critical support, with price action confirming its significance through tests over the past two days. Each time, the price bounced off this level, demonstrating a strong defense by the buyers.
Today, gold is climbing higher, supported by these two successful bounces, which provide a robust price action signal to go long. The repeated defense of the $2,480 level suggests that the support is holding firm, and the sentiment has turned positive. The base scenario now points to a potential rise towards the black resistance level, with over $20 of upward potential in play.
However, as always, we should remain vigilant. While the current situation makes a break below the orange support less likely, traders should note that a daily close below this level would signal a bearish breakout and a sell opportunity. For now, the focus remains on the bullish outlook, but we must be prepared for any scenario the market may present.