Gold has maintained its bullish momentum, reaching a record high of $3,149 on Tuesday. However, the risk of a bearish pullback is also on the rise. Despite a potentially bearish “shooting star” candlestick pattern forming on Tuesday, the pattern will only be validated if gold falls below the low of $3,101, which has yet to happen. As of Wednesday, gold has remained within a tight range between $3,108 and $3,136, indicating a period of consolidation, with the possibility of closing at its highest daily close ever if it surpasses Monday’s close of $3,124.
Technical Outlook
Support and Channel Breakout: Gold has shown signs of support over the past two days at a prior resistance trend line, indicating that the breakout from the long-term channel (starting from February 2024) remains intact. This suggests that the uptrend could continue if the price holds above these levels.
A bullish breakout is confirmed if gold maintains support above the purple trend line. This opens the door for further upward movement toward the next resistance targets.
Resistance Levels: The 261.8% Fibonacci retracement level at $3,153, marked by the high from Tuesday, is a critical resistance level. If gold can break above this, the next targets lie between $3,170 and $3,177. These levels align with both the 250% retracement of the October 2024 decline and an initial target from a rising ABCD pattern.
Bearish Risks
Shooting Star and Potential Pullback: If gold drops below Wednesday’s low of $3,108, the risk of a deeper decline increases, with the $3,101 low becoming critical. A break below this could signal a reversal, pushing gold back below the top channel line.
Lower Support Levels: In case of further downside movement, initial support may be found at the $3,077 level, followed by the recent high at $3,058. The 20-day moving average currently sits around $3,012, and a drop below this could signal a more significant retracement.
Conclusion
Gold’s bullish trend remains intact, but traders should closely monitor key support and resistance levels. If the price stays above the purple trend line and the $3,153 resistance level is broken, gold could extend its rally. However, any dip below $3,101 could trigger a bearish reversal, sending gold back into consolidation or even a correction.
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