Channel Structure and Downside Risk
A failure of the trendline is possible given the continuation signals for the declining trend channel. Since price was rejected near the top of the channel following the lower swing high in April, the lower boundary line of the channel becomes a potential target. The bearish implications will be competing with the potential for dynamic support of the long-term uptrend to be retained, creating a critical inflection point between structural support and trend breakdown risk.
Resistance Levels After Breakdown
Although gold may see a bounce, how it behaves once it reaches potential resistance levels should provide more useful information. This week’s high of $4,364 is key near-term resistance, while the 200-day moving average is a key potential resistance zone near $4,445.
It is important to note that, following the decisive breakdown below the 200-day moving average, gold has not yet retested that level from below. Whether the current low and uptrend line price zone remain as support could set the stage for either stabilization and recovery or an accelerated continuation of the decline into lower channel support.