The Chart of the Week: Gold prices meet critical demand area

Gold has made a fresh weekly low and bears are looking for a deeper close for the month.
A retracement is on the cards to test the bearish commitments from a 38.2% Fibo retracement of daily bearish impulse.

Ross J Burland FXStreet

As per prior analysis noting that the price met a $1,765 downside target, Gold Price Analysis: Target achieved and fresh bear-cycle lows for 2021, the focus now must be on month-end.

We are five days from the end of the trading month and the price is threatening a bearish close for February having already printed a lower low on the monthly chart.

However, we might need to see a firmer test of the upside before the monthly candle can close below the prior month's lows.

The following is a top-down analysis to illustrate the potential trajectory for the price in the week ahead and for what could be in store next month.

Monthly chart

Weekly chart

The weekly chart is on the verge of a bearish close below the Dec lows which would signify that the bears are still in play for March business.

Daily chart

The price has started to move towards a 38.2% Fibonacci retracement area that has a confluence with the old weekly support.

There are a number of risk events ahead this week that could see some volatility from which a firmer test of the area would be expected.

Bears will definitely want to see this resistance structure holding into the close for the week for prospects of a deeper retracement as per the monthly chart above.

From a trading perspective, the 4-hour chart can be monitored for a downside opportunity from the slightly higher ground for a restest of the monthly demand territory:

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Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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