Algorithms may work in decimals but traders are people - and people think in round numbers.
Imagine you’re planning a night out with friends and decide to budget around $100 for dinner and drinks. Realistically, you might end up spending $96 or $105, but you think in terms of the round figure of $100 because it’s a simple, convenient benchmark. The rest is just change.
Another everyday example: when people plan a road trip, they might think, “I’ll drive for 200 miles,” even if the actual distance to the destination is 195 or 206 - those neat, rounded numbers feel more memorable and natural.
Gold is approaching a big round number and it’s already affecting the price action in the market.
Back in 2020, gold broke above $2000 per oz - the momentum was so strong that it went on to make a high of $2075 but traders had their eye on the round number as a long term target. The bulls that had been long started taking profits and bears began selling short at the round number. That selling pressure created the conditions for a top. Ultimately gold traded in a price range with a ceiling just over $2000 for almost 4 years until finally starting a new leg of the uptrend in 2024.
Now almost a year later, the gold price just came within $50 of $3000 per oz and some selling has already started.
The same kind of thing has happened to Bitcoin - but BTC is further down the line. Have struck $100,000 for the first time - the price soared through it to $110,000 but flat-lined afterwards. Nice the price appears to be breaking down.
Gold
Long term chart (weekly)
Trend: Up
Phase: Pullback
Resistance = 3,000 (round number)
Support = $2670 (30 week MA)
Price action: A bearish reversal candlestick pattern demonstrates a pullback has begun in the long term uptrend.
View: We are bullish while above the rising 30-week MA but will not buy against a bearish engulfing pattern near $3k.
Medium term chart (daily)
Trend: Up
Phase: Reversal
Resistance = 2900 (broken trendline)
Support = $2790 (former resistance)
Price action: The broken trendline and bearish RSI divergence mean we no longer want to be buyers short term. However the rising 30-day SMA means we also don’t want to be short against the prevailing trend.
Silver
Long term chart (weekly)
Trend: Up
Phase: Consolidation
Resistance = $35 (multi-decade high)
Support = $26 (broken multi-year resistance)
Price action: The long wicks above $30 followed by a long down-candle suggest further consolidation for now.
View: We will get bullish again once over $32
Medium term chart (daily)
Trend: Sideways
Resistance = $33 (February high)
Support = $31 (rising trendline + former resistance)
Price action: The bearish RSI divergence has led to sell-off. We are looking for $31 to hold but continued weakness could bring the price back to $29
Bitcoin (BTC/USD)
Long term chart (weekly)
Trend: Up
Resistance = $110,000 (all-time high)
Support = $80,000 (30-week MA)
Price action: The steep drop below 90,000 last week has tested the rising 30-week MA.
View: We are bearish below $90,000
Medium term chart (daily)
Trend: Down
Phase: Continuation
Resistance = $91,000 (support-turned-resistance)
Support = $80,000 (bottom of recent sell-off)
Price action: Price broke below key support as well as the 30-week moving average.
Momentum: RSI is oversold
But - as always - that’s just how the team and I are seeing things, what do you think?
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