Dropped Below the 20-Day Moving Average
Yesterday’s closing price indicated some weakness, as it fell below both the trend line and the 20-day moving average. This marked the first daily closure beneath the 20-day MA since April 9. A low swing high suggests there’s some underlying weakness, though its significance hinges on whether it’s backed up by a dip below the flag’s bottom. If that happens, we could see lower swings and potentially more ABCD patterns, which might trigger a double-top formation.
Trends Provide Insight
It’s noteworthy that the price is moving directly upwards past yesterday’s highs. Today, we’ve aligned three different trend indicators. The $3,316 20-day moving average now aligns with the Uptrend Line and the Top Trend Channel Line, marking potential resistance. This alignment hints at bearish sentiment, especially given they all came together on the breakdown day, but that’s not the only factor at play.
There’s also the possibility that the bullish channel’s upside breakout has failed. If this weakness persists, we could target the 50-day moving average, currently at $3,144. That line has previously been tested successfully at swing lows in April, and we might see a similar situation again. To shift sentiment back to the bullish side, the price needs to rise above the 20-day MA before the day’s end.
Weekly Trends Weighing In
The weekly chart is showing signs that might indicate a weakening bullish trend. A couple of weeks ago, gold completed a candle foot pattern resembling a potentially bearish shooting star, leading to a follow-up last week. The recent rally attempt fell short, closing below the highs of the previous week and ending in the lower half of that week’s trading range. However, clear signs of potential bearishness only emerged recently. On Monday, the price dropped below last week’s low and closed under it.
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