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Weekly Bearish Shooting Star Candle Forms
Next up will be a one-week bearish shooting star candlestick pattern that will complete this week. However, it is only valid if triggered with a decline below the low of the week at $3,260. Since gold remains above a key potential support zone and this week’s range is wide, from $3,260 to $3,500, there may be additional consolidation within this week’s range before a breakdown is triggered.
It is interesting to note that the weekly shooting candle follows a daily shooting star candle that marked the high of the trend. Since the two candles are representative of the fractal nature of the market, bearish confirmation of the weekly time frame could see more aggressive selling than what has occurred so far.
20-Day MA Marks Key Level
The first potential support area is around the 50% retracement level at $3,228 and the low from April 16. If the weekly pattern triggers that price area will likely be taken out as there will be additional evidence that a high for now in gold has been reached. Whether that leads to a prolonged or quick bearish correction remains to be seen.
A key trend indicator is the 20-Day MA. It continues to rise and is now at $3,195. However, since the 20-Day line was reclaimed on January 7, pullbacks to the line have failed to find support until trading occurred below the line. Something similar could occur during this next approach as well.
Lower Target at 78.6% Retracement
Below the 20-Day line is a potential support level around a prior trend high and the 61.8% Fibonacci retracement at $3,168 and $3,164, respectively. But a decline below that level has gold heading towards the 78.6% Fibonacci retracement at $3,073.
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