20 days of support at risk
The next lower short uptrend line is a measure of dynamic support for the short-term uptrend. A higher swing low at 2,605 (C) constructs the trend. Since that swing low is part of the price structure for the uptrend, it will be an important potential support level to keep an eye on as a drop below it will signal a potential bearish reversal. And that could be followed by more aggressive selling.
In summary, the main support is at 2,605 and the important resistance level is at 2,721. In the meantime, trendlines, moving averages and other price levels identified within this range can provide some guidance, but are unlikely to provide a sustainable breakout signal. The consolidation can continue if gold stays within these two price points.
Bearish weekly pattern
This week ends bearish for gold as the weekly chart shows a shooting star candlestick pattern. The low for the week and potential support was at 2,627. It follows a bullish breakout above last week’s high earlier this week. A weak weekly close will not give bulls confidence and could help prolong the current uncertainty.
Furthermore, this could lead to an acceleration downwards, which would be reflected in a drop below 2,627. Weekly support would then be at a two-week low of 2,614. That’s not far off the three-month low of 2,605 and the 20-week MA of 2,608. Each is an area to pay attention to if gold comes close.
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