When started sliding on Thursday and again on Friday, the start of a “Bearish Candle” caught my attention while I was staring at the charts.
Undoubtedly, weakness persisted from the beginning of Friday’s session, as gold futures opened at $3,990.32, compared with Thursday’s close at $3,991.93, despite testing the day’s low at $3,973.49.
On Friday, after starting the day at $3,990.65, it tested the day’s high at $4,012.07 and the day’s low at $3,967.70. Gold futures are trading at $3,970 at 9:00 P.M. on the daily chart.
On scrutinizing these moves at the same time on the 1-Hour chart, I find that the hourly candle formed at 8:00 reflects the advent of a selling spree, after facing significant resistance on Friday at the psychological level of $4,000, and despite attempting to sustain above this since the day’s dawn, finally breathed its last at 8:00 P.M.
While on Thursday, gold futures were trying to defend this psychological support till breathing down exactly at 8:00 P.M., and tested the day’s low at $3,973.45 at 03:00 A.M., before closing the day at $3,991.93.
Today, it will be interesting to see how gold futures behave at the same time, before closing the day, as a breakdown below the level, tested by the 9:00 P.M. candle, when gold futures tested a low at $3,977.30, as the gold futures are currently trading at the same time below this level.
Though the selling spree lacks volume, as seen yesterday between 8:00 and 9:00 P.M, the exhaustion remains the same as the current one-hour candle has formed a bearish hammer, signaling that the depth of today’s fall could deepen, as the elevated U.S.- Iran conflict has capped the upside due to energy-driven inflationary pressure on its 140th day.
Gold futures could find a breakdown below the key support at $3,955, before today’s closing, as I have discussed in detail in my previous analysis, Gold’s Failure to Rally Sends a Warning to Bulls ( https://www.investing.com/analysis/golds-failure-to-rally-sends-a-warning-to-bulls-200684112 ).
Undoubtedly, gold futures are showing extended indecisiveness, as surging expectations from the Fed’s decision at its July 27-28 meeting hover near a hike to control energy-driven inflation – a challenging task for the Federal Reserve, while the U.S. and Iran are far from the negotiation table to date.
Despite a sharp reversal after testing a low at $3,963.15, gold futures moved upward to test the 20 EMA resistance at $3,995, but faced significant pressure before starting the 10:00 P.M. candle.
