From technical view, Gold is about to complete a bearish reversal pattern below 1240. The reversal pattern, if complete, might lead to price fall below 1200.
Early this week, Gold broke out of a triangle pattern. Price bridged 1233 and quickly gained 60 pips to hit 1239 (which falls within 1238-1240 important Fibonacci reversal zone). From 1239, it quickly dropped to 1225 yesterday and back to 1239. With price testing 1239 twice in less than 24 hours, there is likelihood of a double top reversal pattern completing just below 1240. Double top pattern is a popular reversal pattern among market chartists. If price breaks below the neckline of this pattern at 1255, we might have it down to 1200 or far below as the 5th wave gets on the way.
Gold's price movement this year has been largely bearish. The bearish move is emerging into a clear impulse wave. In older Gold technical updates, we discussed why the impulse wave is currently about to complete the 4th wave of the year-long impulse wave. Yesterday's update looked at the long term and short term wave analysis.
Gold Technical Analysis and Important Price Levels
Price is about to complete a double top reversal pattern below 1240. A break below 1225 would confirm this bearish scenario and start a big fall below 1200. This wave count has wave 4 ended at 1240 if the necessary breakout downside happens. There might be one last bullish push slightly above 1240 to complete a different reversal pattern (probably ending diagonal) before the expected big fall. If price hugely breaks above 1240, we might see it advance toward 1250.
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