Faces on the key in the short term
Also, an important point to consider is that the short-term downtrend line’s importance may have diminished since the recent swing high was established on December 12. A new downtrend line connects that high from the top to a new parallel line across the bottom of the channel.
The fact that the downtrend line and the 20-day line identify a similar price area could lead to a spike if the 20-day line is reclaimed. When two different indicators show a similar price level, the pivot breakout can sometimes show a higher level of interest and enthusiasm than at other times.
Descending channel shows downward pressure
The new downtrend channel may lower the potential significance of a breakout above the 20-day line. The same would also apply to a callback of the 50-day MA, slightly higher at 2,666. This is because the new upper downtrend line represents potential resistance. It adds to the significance of the December swing high (C) because it is a lower swing high and is part of the developing downward price structure. The current situation is that the potential for a bearish continuation of the descending channel remains until there is a rise above the December swing high.
Reclaiming a weekly high of 2,664 could improve sentiment
Another important upside price level to keep in mind is last week’s high at 2,664. Note that it is very close to the 50-day MA. Since last week ended with a lower weekly high and a lower weekly (not shown) low, a sustained rise above last week’s resistance would begin to improve bullish sentiment in gold as it replaces last week’s bearish signal on the weekly time frame would destroy.
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