Gold Price Erased Its April Rally - What's Next? / Commodities / Gold & Silver 2023

April had started with gold at $1,990,then gold moved as high as $2,063.40, and yesterday, it closed at $1,999. Atthe moment of writing these words, gold futures (because that’s what you see onthe above chart) are trading at $1,993.

Monthly Reversal Candlestick

This means that gold formed a hugemonthly reversal candlestick. Since the opening and closing (assuming that thecurrent price will be the final price for the end of April) prices are almostidentical, this candlestick is called a “gravestone doji”.

If gold moved a bit higher from here, itwould create a “shottingstar” candlestick based on its April price movement.

And if it moved a bit lower from here, itwould… Also create a “shooting star” candlestick, just a different one.

What would the difference be?

None, because all those candlesticks are reversalpatterns. In other words, the implications are almost certainlygoing to be bearish after today’s session, regardless of what fancy name we useto call this month’s price movement.

The only thing that could make thismonth’s candlestick bullish would be a rally of at least $30, which would haveto happen today. And based on the analysis ofgold’s pre-market decline, it’s highly unlikely that we’ll seesomething like that.

I wrote on numerous occasions about how importantweekly goldprice changes are, but monthly price changes take it to yet anotherlevel. A full month is enough time for any price noise to average-out anddisappear. What ultimately happened?

Thismonth in gold, ultimately, nothing happened except gold’s failure to breakabove $2,000.

The monthly reversal is a very powerful,bearish indication that points to lower gold prices in the following months.

HistoricalComparison to 2008

How can things get any more bearishbased on the above chart alone?

They actually can – please look at howgold started its sharpest decline of the past decades. That’s right, I mean the2008 one.

Gold started it right after a monthlyreversal! I marked the previous monthly reversal and the current one withorange arrows. The history tends to rhyme, so the implications here are very bearish.

There’s one additional thing about 2008that I would like to emphasize here.



Namely, if you look at the size of thepre-slide corrective upswing we saw in 2008, you’ll notice that it’spractically identical to what we saw recently.

Sure, gold didn’t rally as sharply now asit did back then, but the overall size (percentage-wise) of the rallies is very similar. That’s what I marked with green rectangles.

So, yes, even though the recent rallyseemed like a game-changer to many, it’s all within the self-similar patternthat ended with a massive decline.

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Przemyslaw Radomski, CFA

Founder, Editor-in-chief

https://www.goldpriceforecast.com

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