- Summary:
- Gold price at stiff resistance as it retests a contracting triangle. At this point, bears will likely step in and sell against the series of lower highs.
Gold price bounced back from the lows and now retests the lower edge of the triangle that acted as a reversal pattern. At this point, bears have a good chance for a short trade with a stop at the upper edge of the triangle and a take profit at a new low.
The more time passes, the more obvious it becomes that the market simply awaits the two main events ahead – the ECB and the Fed decisions. Both central banks are expected to inject even more liquidity in the markets, so the dollar trades with a bearish tone.
This is the reason why the gold price bounced from the lows – a weaker USD coupled with higher US stocks. Should the trend in the USD change, then gold bears have a chance of a move lower sooner rather than later.
Gold Price Technical Analysis
The chart below shows the strong comeback gold has put recently. It bounced $100, from $1,760 to $1,860 in what seems to be a reaction to an inverse head and shoulders pattern. With the measured move already completed, traders are likely to exit and focus on the bigger picture – the horizontal resistance reached in the meantime.
The invalidation for going short at market should come at the upper edge of the triangle, especially if the market manages to break the series of lower highs. As long as the series remain in place, bears will keep pressuring on any bounce.
Gold Price Forecast
