Technical Analysis: Spot gold may fall below the $3970 support level

1. Spot gold may retest the support level at $3,970 per ounce. If this level is effectively broken, further downside may be opened, targeting the $3,915 to $3,931 range. 2. This target zone is suggested by the lower boundary of the descending channel. In the ongoing downtrend from the $4,202 high, a complex wave pattern has formed, presumed to be a double zigzag corrective structure. However, there is also an alternative wave count—a five-wave decline cycle, with the difference between these counts lying in varying market expectations for the current rebound’s strength. 3. If the market is following a five-wave structure, the rebound could be stronger, possibly extending towards the $4,095 area. If it's a double zigzag structure, the rebound is likely to be more limited, possibly confined to the $4,000 to $4,026 range. 4. The daily chart shows gold preparing to break below the $3,965 support; if breached, it may continue lower to test $3,746, which is consistent with the large bearish candlestick signal from the previous trading session.