Gold Price Retreats After Testing Resistance at 4220

On June 22nd, the gold price fell below the $4220 level during the early Asian session on Friday. Our analysis at the time indicated that selling below $4220 was the appropriate strategy. The rationale behind this level is that it represented the low point established during the US Federal Reserve's policy decision on Wednesday evening. Once this prior low was breached, it transformed into a resistance level based on the principle of support-turned-resistance. Consequently, trading below this level naturally led to an expectation of continued bearish momentum.

This Monday, the gold price experienced a rapid rebound in the early Asian session, reaching the $4220 level before encountering selling pressure and retreating. This move precisely tested the aforementioned $4220 resistance, completing a minor cycle of support-turned-resistance and confirming the presence of selling pressure. The Friday trading recommendation to sell on rallies near the $4220 resistance was once again validated. The key question now is the outlook for today.

In a prevailing downtrend, significant highs are not easily broken—this aligns with the often-cited principle that in a weak market, prior highs hold. After the early session briefly established a high at $4220 before pulling back, the 1-hour chart printed a candlestick with a long upper shadow. This further underscores the significant resistance at $4220, solidifying its role as today's crucial pivot level. As long as the price remains below $4220, it is likely to continue fluctuating at lower levels, with the next downside focus being the $4120 low. A decisive break above $4220, however, would signal a continuation of the upward rebound, with the next major resistance expected around $4275.

For intraday trading, a suggested approach is to consider selling gold on rallies approaching the $4220 zone, with a protective stop of 8 points and a target exceeding 30 points. Alternatively, if the price declines first, a long position could be initiated above $4136 to speculate on a short-term technical rebound.