Spot gold daily chart shows bounce off bottom of falling channel. Source: TradingView
\nResistance Layers Define Next Breakout or Rejection Zone<\/p>\n
A lower swing high at $4,640, along with the 20-day moving average, identifies a lower short-term support zone, as a drop below it will signal likely further weakness. Since Friday was the first approach to the 50-day moving average to test it as resistance since it broke as support on March 18, resistance may persist. However, a decisive breakout above the 50-day average, followed by a daily close above it, would put the 78.6% Fibonacci retracement at $5,122 in sight. The downtrend line is nearby, and it also represents the top boundary of a falling trend channel. This is notable since the bottom boundary of the channel was confirmed as a support zone during the sharp March selloff.<\/p>\n
Confluence Support Suggests Potential for Continuation<\/p>\n
Gold is sitting on a strong support confluence zone consisting of the 10-day, 20-day, and 100-day moving averages, along with the top channel line of a long-term rising trend channel. This suggests that a breakout above the 50-day average may be possible before a drop below this zone. Once prior resistance becomes support, as seen with the three moving averages, the short-term bull trend is showing an intention to continue higher.<\/p>\n