Analysis Technical Analysis

Gold Futures (GC) Fills its $1,739.6 Gap

  • 1,739.6 USD gap filled
  • Prices consolidate after the downtrend
  • GDP growth rate report to be released on August 25th

The Gap

We pointed out last week in our Gold analysis that if the bearish trend gained more momentum, the gap made on July 27th would likely be a target to fill. We have seen that happen with the gap filling on August 22nd. The market rebounded swiftly as it very often does once a gap is filled, putting in a low to watch out for.

Taking a look at the 2-hour chart, prices have retraced into the gaussian channel for the first time since the down-move began. This is a sign that bearish momentum may be halting for the time being; there is still no clear sign that the trend is reversing.

Our bearish case targets are $1,739.6 initially, and if a break of that level occurs, we could see a move down to $1,708.9, which is the next level of intermediate support. For the bearish sentiment to remain, we must note that prices will not rally above $1,773.6, which is our upper gaussian channel line. If prices rally past that point, we would need to wait for a further consolidation period followed by a break above that level for us to begin looking for long trades.

2 Hourly Chart Gold Futures (GC) with gaussian channel
2 Hourly Chart Gold Futures (GC)

Weekly Chart Candlestick

The weekly chart closed last Friday with a strong bearish engulfing candle stick pattern which is usually a bearish signal as the name suggests. In order for a bearish engulfing to confirm, we need to see an uptrend prior to the formation and then a significant close below the previous candle’s low. Targets are unclear with this candlestick pattern, it’s just a way of looking at strengths and weaknesses in the current market conditions.

Weekly gold chart
Weekly Gold (GC) Chart


Overall the technical outlooks for Overall the technical outlook for Gold seems to be bearish as the dollar continues to strengthen; this could change if the Gaussian channel line is tested at 1773.6. The GDP growth rate will be released tomorrow, which will give a better picture of the direction of the US economy.