Gold Price Nears $4,381 as Double-Top Pattern Tests Bullish Momentum
Gold is struggling to sustain its momentum after reaching a two week high at $4,381. This was a significant milestone where gold formed...
Quick overview
- Gold is facing challenges in maintaining its upward momentum after reaching a two-week high of $4,381, forming a potential double top pattern.
- Current trading is at $4,342, with key support at $4,265 and resistance at $4,381, indicating a critical phase for traders.
- The RSI suggests cooling momentum, hinting at a possible short-term correction, while the overall structure remains bullish.
- Traders are advised to wait for confirmation of the trend before entering long positions, with potential targets at $4,445 and $4,500.
Gold is struggling to sustain its momentum after reaching a two week high at $4,381. This was a significant milestone where gold formed a potential double top inside a clear rising channel. This kind of formation is often a sign that a bull run is about to slow or even reverse. The fact that a spinning top candle appeared near that resistance zone tells us that traders are feeling quite indecisive, wanting to cash in their profits but worried that the uptrend has further still to go.
Gold is currently trading at $4,342, and while its above the 20-period EMA, the 50-ema at $4,265 is acting as a safety net for anyone taking a bullish view. Although we have had a fairly mild pullback, the bigger picture is still very much intact and underpinned by a series of higher lows on the 2 hour chart
RSI is Suggesting that Momentum is Cooling Down
As you can see, the RSI is currently sitting at 59, and is gradually losing its upward momentum after getting a bit overbought recently. So far this hasn’t yet led to a full sell-off but does suggest that a short-term correction might be on the cards. This happens a lot when gold pauses for breath – the pause gives us the chance to gather strength before the next leg upwards – provided the right supports hold up.
If gold manages to close above $4,381, this could open the door to $4,445 and $4,500, but failing to hold above $4,315 could lead to a bit of a deeper pullback toward the Fib levels of $4,270 and $4,200.
Key Levels to Watch for Gold
For traders, keeping an eye on both momentum and structure is key.
- Immediate resistance zone: $4,381
- Support zone: $4,270 – $4,290 (50-ema region)
- Potential breakout target: $4,445 – $4,500
- Potential stop loss level: Below $4,200
This situation reflects a classic ‘watch and react’ phase. This is the bit before gold decides what to do next.
Gold Trade Plan: Wait for Confirmation
Overall the technical outlook is cautiously optimistic, but we need to wait for confirmation that the trend is still underway. This might be something like a big bullish engulfing candle, or an RSI bouncing back above 60 before we re-enter a long position.
If confirmed, a decent rebound from $4,270 – $4,290 might offer us a good risk-reward opportunity to hit the $4,445 resistance level.
The broad structure is still in favour of the buyers, but the fact that gold is struggling at $4,381 is a warning sign that there could be some volatility ahead. A disciplined approach – blending patience with precision in our analysis is the key to making sense of what happens next.
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