Gold Resumes Bearish Trend

A quick update to my gold post of 18th September where I suggested that any breakaway for the precious metal from the volume point of control in the $1200 per ounce region was more likely to be to the downside. And indeed this has been in the case in the break lower of the past couple days which has gathered both momentum and volume and taken gold to a low of $1185.

The break lower is confirmed on the weekly chart, where any student of volume price analysis would instantly recognize the anomalous candles (as highlighted on the chart) and where, as we can see, an effort to rise on two consecutive weeks has been accompanied by very high volume. This combination of price action and volume could only result in a move lower and is also a resumption of the longer-term bearish trend that has been in place since mid-June when the metal broke away from the volume point of control in the $1300 per ounce region.

And with volume on this week’s down candle also high there is no sign yet the metal has found the stability and firm base with which to mount a countermove higher.

From a support and resistance perspective, the levels to consider are: any move to the upside will run into the strong resistance at $1197 while To the downside there is some minor support at $1180 and $1185. However, if these are taken out the next significant level is last
month’s low at $1167. And should this level be broken, with good volume, $1160 will then come into play.

Finally, of course, there is the US dollar, which following this week’s FOMC has regained some bullish momentum and to add further downward pressure to the precious metal.