Maintains the strength of Thursday’s rally
There has been only one day of strong uptrend since Monday’s low of 2,364. Today’s tight range shows a clear slowdown in momentum. Whether or not momentum will continue to slow remains to be seen. At the time of writing, gold is on track to end the week with its second-highest weekly close ever. That’s a sign of strength.
Additionally, the weekly chart is expected to end with a bullish hammer candlestick pattern. This pattern is stronger when it occurs at a swing low and is not within a consolidation range, but it does suggest underlying strength for this week. Nevertheless, gold is moving into a potentially significant resistance zone highlighted by the twin tops of 2,478 and 2,484, the record high.
On the way to the weekly high of 2,459
A breakout above today’s high of 2,437 will provide the next bullish signal with a target at Monday’s high of 2,459, which is also a weekly high. Note that gold has been trading within Monday’s range since Tuesday. This has characteristics of price consolidation as this week’s price action is within last week’s support and resistance areas.
Monday’s low was 2,364. From that low, gold has formed a symmetrical triangle pattern. Given its position near the top of the trend, it looks like an upside breakout is the most likely outcome. However, this means gold may continue to consolidate for a while while it fills the triangle.
50 days Line Key Support
The 50-day MA has converged with the lower line of the pattern and is currently at 2,371, marking support along with the trend line. Since a symmetrical triangle can break in either direction, there is potential for a downward move. If this happens, the first lower target is at 2,347, which would complete a falling ABCD pattern.
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