Gold signals a technical reversal signal

Last week gold retested major support around the $1780 region. However, sellers were unable to push price lower and the daily price action on Friday suggests a near term technical reversal. Now the fundamental outlook for gold gains needs the USD and real yields to fall lower for gold to really lift. You can learn all about that here in a video where the key drivers for gold gains is presented. You can also check out an article to read on my site here. However, in this article I want to outline Gold’s technical reversal signal and show what the technical pathway may look like from here. 

The daily chart has a bullish hammer reversal bar in place. The tail is more than three times the size of the body, the body is bullish, closed within the body of the previous candle, and there is plenty of space to the left hand side of the candle. 

Where might gold technically reverse to?

When markets lack a key driver they can move technically until a fresh catalyst comes into place. So, in the absence of a key catalyst here is what can be reasonable expected from gold. The first target area would be up into the 1825/$1830 region with the break of the nose of the reversal hammer bar.

Where might technical retracement buyers step in?

The first place would be on the break of the nose which has already happened. However, with a long candlestick, like the one here, the 50% retracement would be an obvious place. 

Gold buyers at the 50% fib level

The key takeaway here is that technically speaking, in the absence of any fresh fundamental drivers, a first retest  of that $1825 region is not an unreasonable expectation. However, a big shift of any fundamentals remain a crucial risk that traders must be aware of. 

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