Gold made a monthly Dark Cloud Cover in June. The odds are with bears now, but a confirmation is required. Let’s explore the hypothesis from different angles.
In June gold made a dramatic reversal and produced a solid Dark Cloud Cover (1 more point down and it would be a Bearish Engulfing). The move shifted the odds to the dark side. However, the odds are not as high as they would be after engulfing and the candle requires a confirmation next month. From that perspective, a rally at the beginning of the month is quite possible.
The monthly indicators so far support further downwards moves.
The weekly candles formed a 7-week Tower Top, a very strong bearish statement. It is well supported by the falling indicators. The previous and current weeks show the signs of the pause before another leg down.
The indicators are not improving. Two days ago the bearish 8/20 EMA cross was formed.
Possible development – horizontal within $1750-1815 channel. There is nothing bullish until we can see a solid green candle closed above $1815.
Today gold formed a Piercing Line combo and shifted the daily odds to the bulls. If the momentum continues, there is a chance for a short-term rally towards $1810-1815 area. Bulls would need to break the resistance of 8 and 20 EMA lines to have the rally become a mid-term one.
The 2hr chart above shows my main operative count. By multiple Fibonacci measurements, I view the $1810-1815 area as an inflection one. If passed through, I will adopt the blue counts. If gold is rejected down, a new lower low would be expected.
Gold was damaged greatly in June on the monthly and weekly frames. The odds are on the dark side. While it can experience a short- and even a 2-3-week-long rally, the expectation is that it ends July at a lower level than in June.
Based on various measurements, the target area for the correction: $1720-1280.
They are discussed in details in the Long Term Forecast (link below).
If gold is going to make a bottom and reverse, we should see the bullish signs at least on the weekly charts.
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