Mapping the Market: Gold faces tipping point trouble

• Bearish engulfing pattern formed in March, followed by a break below the 10-month moving average in June
• Gold has fallen nearly 30% from January's record high of $5,594 to a low of $3,942
• Key supports to watch: $3,821 and $3,702, with a break opening the door to $3,255

Confirmation came in June, when gold broke below its 10-month moving average - a key support level where buyers would typically be expected to step in. That breach dragged gold down to $3,942, a near 30% drop from January's record high of $5,594, according to data supplied by LSEG.

Gold has clawed back some ground in July, but two further tipping points now loom: the 20-month moving average at $3,821 and the 50% Fibonacci retracement at $3,702. Fibonacci levels mark price points a market often revisits after a big move, and the 61.8% level is dubbed the "golden" ratio because it frequently decides whether a trend is truly over. Should both nearer supports fail, gold could fall toward that 61.8% retracement at $3,255.

For the longer-term outlook to improve, gold would need to reclaim the 10-month moving average, now at $4,453.

July 23 (Reuters) - Gold's remarkable multi-year rally may be losing steam, with technical analysis pointing to further declines ahead.

Click here for a more detailed chart illustrating the bearish engulfing candle.

The first crack in the picture appeared in March, when gold formed a bearish engulfing pattern on the monthly chart. This candlestick formation consists of a bullish, upward-moving candle followed by a larger, downward-sloping candle that completely swallows the previous one. In gold's case, sellers overwhelmed buyers so decisively that the prior month's entire gain was wiped out within a single month.