Is Gold Headed for a Bearish Correction?
As experts in the stock market and trading, we always keep a close eye on potential trends and patterns that may impact our investments. Yesterday, gold dropped below a key trendline, signaling a possible shift towards a bearish correction. The day’s close in the lower third of the price range further supports this theory. Today’s bearish candle is adding more evidence to the possibility of a bearish continuation.
If gold continues to decline and breaks below yesterday’s low of 2,732, we can expect a test of lower support levels. The first support area to watch is between 2,700 to 2,686, which includes the 20-Day Moving Average, a prior trend high, and a bull flag high. An internal uptrend line is also pointing towards this price range. If this support fails to hold, the 50-Day Moving Average at 2,624 and the bottom of the flag at 2.60 become the next likely targets.
Weekly Chart Signals Bearish Trend
Looking at the weekly chart, we see some concerning signs for gold investors. A bearish doji shooting star candlestick pattern is set to close the week, with prices ending in the lower third of the week’s trading range. A decisive drop below this week’s low of 2,725 could trigger a breakdown of the weekly pattern, signaling a bearish reversal.
If the daily close confirms this trend, we may see gold testing last week’s low of 2,709 as the next potential support level. Keep a close watch on the three-week low at 2,638 if gold continues to decline. It’s worth noting that gold is currently overbought on the weekly Relative Strength Index (RSI) and shows a minor bearish divergence in the daily timeframe.
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