Gold has reached a point where one decisive move could change its direction for several months. The gold price tested a major resistance line this week, although buyers could not secure a weekly close above it. That rejection leaves gold trapped near the narrow end of a large chart formation, where the distance between support and resistance continues to shrink.
Analyst Sqeaky Mouse believes an upside breakout remains the more likely outcome. However, the chart still presents a much less comfortable scenario that could send gold toward $3,300 if buyers lose control.
Sqeaky Mouse explained that gold touched resistance this week but failed to close above the level. A look at the shared weekly gold chart shows why this rejection matters.
Gold has traded beneath a descending resistance line since the price reached a record high near $5,600 earlier in 2026. Each recovery attempt has ended below that line, which has gradually pushed the gold price toward a rising support area.
Gold did tap resistance this week but failed to close above. We are no doubt in a pivotal spot as I see a breakout taking us back above $5,000 and a breakdown to $3,300. Breakout is the more likely scenario out of this formation. pic.twitter.com/94StaAK0Xb
— Sqeaky Mouse (@TheSqeakyMouse) July 24, 2026
Those 2 boundaries have formed a tightening structure. Gold now has less room to trade between them, so a larger move could arrive once the price leaves this formation.
Sqeaky Mouse considers an upside breakout more likely. A convincing weekly close above the descending resistance could reopen the route toward $4,400 and $4,800. Continued strength could eventually carry the gold price back above $5,000.
The bearish scenario cannot be ignored, however. A breakdown beneath the lower boundary would weaken the entire formation and could expose the $3,300 region.
Gold Price Must Defend the Strong $3,940 Support Area
Gold currently trades near $4,050, placing it slightly above a major support zone around $3,940. This level has protected the gold price since November 2025 and remains one of the most important areas on the weekly chart.
The blue 75 week exponential moving average provides extra support near the same region. Gold has remained above this moving average throughout much of its broader advance, which makes the current test especially important.
Buyers could preserve the larger bullish structure if the $3,940 support continues to hold. Bears would gain greater control if gold records a clear weekly close beneath that area.
Such a breakdown could open several lower price levels:
- Initial support could appear near $3,700.
- Further weakness could send gold toward $3,550.
- Deeper losses could expose the $3,400 region.
- A break beneath $3,400 could place $3,300 and $3,200 within reach.
These targets represent possible support areas instead of guaranteed destinations. Gold could pause or recover from any of them if demand returns.
Read Also: XRP Price Prediction: Analyst Who Predicted 500% Rally Says $15 Is Next
Gold remains caught between 2 very different outcomes. An upside breakout could confirm that the correction has ended and place the gold price on course for another test above $5,000.
A breakdown beneath $3,940 would create a different picture. The $3,700 and $3,550 levels may provide temporary support, although continued weakness could pull gold toward $3,400 and eventually $3,300.
FAQs
Subscribe to our YouTube channel for daily crypto updates, market insights, and expert analysis.
