Gold Price Forecast: Undercut Setup Signals Potential Bottom

Author: Bruce Powers

Published: June 11, 2026

Overview

The article discusses the current state of gold prices, which have recently dipped to a corrective low of $4,024. This decline follows a failure to find support near the March swing low of $4,098. However, the price has reached a significant support confluence, indicating a potential reversal point.

Support Confluence Under Pressure

Gold's recent price action suggests it is testing a critical support zone, validated by several technical indicators:

• The March swing low at $4,098.
• The 61.8% Fibonacci retracement level of the long-term upswing near $4,067.
• An uptrend line and the initial 100% projected target for a falling ABCD pattern.
• A small basing consolidation pattern from November 2025.

These factors collectively suggest that gold may be nearing a potential bottom, although the risk of further downside remains if this support fails.

Reversal Conditions Begin to Emerge

The article highlights the emergence of a potential "undercut-and-run" bullish setup. This occurs when sellers initially control the market, leading to a new trend low, but then buyers take over, resulting in an intraday rally that closes above the previous low. This indicates that the bearish signal may not be confirmed, suggesting a possible reversal.

Trigger Levels and Market Response

A bullish reversal in gold would be triggered by a move above Thursday’s high of $4,220. The article emphasizes that failed breakdown patterns can lead to sharp moves in the opposite direction, which is what the "undercut-and-run" setup aims to capture. However, this strategy is recommended for experienced market participants, as further testing of support levels may still occur.

Lower Support Risk Scenario

If gold falls below the uptrend line, the next target zone would be around $3,929 to $3,873, which includes prior support levels and the 127.2% projected target for the ABCD pattern.

Conclusion

The article provides a detailed technical analysis of gold prices, indicating a potential reversal at a critical support zone. Traders are advised to monitor key levels for potential bullish signals while remaining cautious of further downside risks.

About the Author

Bruce Powers is a seasoned finance professional with over 20 years of experience in financial markets. He holds an MBA and is a CMT® charter holder, having worked as head of trading strategy at hedge funds and as a corporate advisor for trading firms.