Looking for bearish confirmation
If the breakdown continues, the recent swing low of 2,605 should be breached to the downside. The bear flag is within a larger developing bearish pattern that is reflected in a fall
ABCD pattern. That should increase the chances of gold hitting lower targets as sellers take back control. In other words, when downward momentum increases. Additionally, there was a sharp one-day decline in gold before the flag was formed. The sharp drop created a clear flagpole. An initial lower target for gold is around the recent swing low of 2,536. That swing low completed a 50% retracement. With only one day left in the week, gold is on track to complete an inside week.
Falling ABCD pattern indicates a potential of 2,470
The developing descending ABCD pattern indicates an initial lower target of 2,470. Since the bear flag accompanies the ABCD pattern, it appears to increase the chances of gold testing the 2,470 price zone before the current correction is complete. Of course, support around the 50% level at 3,522 or slightly lower could be enough to halt the decline and lead to a bullish reversal. That will be the next major pivot if the flag drop continues.
If the collapse does not continue and instead a rally above the four-day high of 2,657 occurs, the flag will develop further. The main potential resistance would then be around the 50-day MA at 2,668 and last Friday’s high of 2,666.
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