Gold Buyers Target Higher Levels After Completing Inverse Head and Shoulders Pattern
Wednesday Market Overview:
Asian stocks declined on Wednesday following disappointing earnings reports from US tech giants Tesla and Alphabet. Concurrently, the Japanese yen reached a seven-week high ahead of next week’s Bank of Japan meeting, where a rate hike remains on the table. Investor risk aversion has increased interest in gold, helping the precious metal halt last week’s declines. The US dollar is experiencing stable trading as traders look ahead to Friday’s inflation data and next week’s Federal Reserve meeting.
Technical Analysis:
In the four-hour chart, gold has broken above the 2412.10 resistance level, maintaining a bullish outlook as long as it trades above this key support. This breakout aligns with the completion of an inverse head and shoulders pattern, signaling a potential upward movement. The immediate target for buyers is 2419.78. Sustained bullish momentum could pave the way for gold to reach 2431.33 and ultimately 2440.34.
Alternative Scenario:
Conversely, if sellers manage to push the price below the 100-period moving average and the 2412.10 support, the outlook will turn bearish. Breaking below the 2401.31 support would focus sellers’ attention on the 2383.86 level.
Key Levels:
Resistance Levels:
- Resistance 3: 2440.34
- Resistance 2: 2431.33
- Resistance 1: 2419.78
Current Price (at the time of analysis): 2417.42
Support Levels:
- Support 1: 2412.10
- Support 2: 2401.31
- Support 3: 2383.86
Impactful Events:
In addition to US housing market reports, including new home sales and building permits, preliminary S&P PMI indices for the manufacturing, services, and composite sectors will be released. These could cause significant fluctuations in the US dollar and, consequently, gold prices.
Oscillators:
RSI (Relative Strength Index): Bullish, indicating continued buying interest.
MACD (Moving Average Convergence Divergence): Bearish, suggesting caution.
Moving Averages: Mixed, reflecting the current consolidation and potential for a breakout.
Conclusion:
Gold is positioned for potential gains as it completes an inverse head and shoulders pattern and trades above the key 2412.10 support level. Sustained bullish momentum could drive prices towards 2419.78, 2431.33, and 2440.34. However, if the price falls below the 2412.10 support, the outlook will turn bearish, targeting 2401.31 and 2383.86.
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