Gold prices reached a new record high on Friday, briefly touching $2,887 before experiencing a bearish reversal that led to intraday selling. As of now, the precious metal appears set to close the day in a weaker position, potentially within the lower half of the day’s trading range. If the market closes near these levels, gold will have completed a bearish shooting star candlestick pattern, signaling a potential downward shift.
A bearish trend could be confirmed if gold drops below the day’s low of $2,852. This reversal follows a significant rally, with prices surging by $304 (or 11.8%) from the previous low, which now places gold in a resistance zone. This technical pattern warrants attention as it may signal the beginning of a retracement after a strong rally.
Resistance Zone and ABCD Pattern Target
Today’s high slightly surpassed the previous trend high of $2,882, and resistance has been encountered near the target of $2,889, identified through the rising ABCD pattern. The ABCD pattern is used to pinpoint harmonic price relationships between consecutive price movements, and the $2,889 target corresponds to 161.8% of the price change from the first advance (labeled AB). The bearish reaction observed today suggests that gold has encountered resistance at this level.
Potential Pullback
Given the strength of the recent rally, it would be natural for the gold market to pause and consolidate or retrace before continuing its upward momentum. A key support zone is identified around the prior high of $2,790, which aligns with the low of this week at $2,772 and the 38.2% Fibonacci retracement at $2,776. This creates a support range between $2,790 and $2,772.
Additionally, the 20-Day Moving Average (MA), which has been rising, is currently positioned near $2,764. After the 20-Day MA was reclaimed in early January, it has not yet been tested as support, but it could play a role in the upcoming bearish retracement if the trend shifts downward.
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