Gold Talking Points:
- Gold prices continue to display a relative calm as other anti-USD markets, such as Bitcoin, continue to fly-higher.
- There may be bullish drive in Gold as a longer-term bullish trend remains in pullback, and a possible shorter-term bullish breakout formation has begun to show.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
Gold prices continue to tease the prospect of a bullish breakout. I had written about a possible double bottom formation last week and that potential for bullish price action remains. But, at the moment, it appears that much of the anti-USD sentiment has pushed in towards the crypto space as Bitcoin has set yet another fresh all-time-high.
It wasn’t always this way for Gold, however, as last summer saw the yellow metal with a strong bid as Gold prices pushed up to a fresh all-time-high. But like a light switch being turned off, bears pounced after a bearish engulfing pattern on August 7th and matters haven’t really been the same since. What initially looked like a quick pullback turned into a prolonged counter-trend move. There is still scope for classifying the past eight months as a pullback in the bigger-picture theme, largely taken from the price action juxtaposition with the Fibonacci retracement produced by the major move starting in 2018.
At this point, we can see price action continuing to huddle around the 38.2% retracement of that major move, which keeps the door open for bullish trend continuation in this bigger picture theme.
Gold Weekly Price Chart
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Gold: 1680 a Big Spot
So given the current context of a longer-term bullish up-trend that’s now been in a prolonged pullback – the big question is when buyers might jump in for a round of resumption.
There may be bullish potential brewing as looked at last week, with Gold prices producing a possible double bottom formation. The price of 1680 came in as support in early-March and then again later in the month. That second rejection, however, is what can possibly lead-in to a reversal, and as we show in DailyFX Education, a break of the ‘neckline’ of the formation can open the door to fresh bullish trends.
I’m looking at that neckline at a spot of prior support/resistance, spanning from around 1755-1760. A breach of that level confirms the double bottom and opens the door for topside in Gold.
Gold Four-Hour Price Chart
Chart prepared by James Stanley; Gold on Tradingview
— Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX