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Awaiting Consolidation Breakout
Since the pennant formation followed a sharp decline from last week’s new high, it can be considered as a potentially bearish formation. But of course, that will be determined by the direction of the breakout. The pennant pattern is clearer on an intraday chart (not shown) than the daily. Earlier support and resistance levels that are inside last Wednesday’s range include $3,268 and $3,353, respectively.
It is interesting to note that an initial measuring objective for the pattern is around $3,182. Since that price target is in the vicinity of a prior trend high of $3,168 and the 61.8% Fibonacci retracement at $3,164, if triggered the bear pennant objective adds to the potential significance of that potential support area.
Weekly Bearish Shooting Star Remains
Last week’s $3,500 record high reached the 161.8% projected target for a rising ABCD pattern before sellers took back control. It followed signs that the price of gold was extended, including upside breakouts from two rising parallel trend channels, one with purple lines and the other bounded by blue lines on the chart. Subsequently, the week ended with a potentially bearish weekly shooting start candle pattern. A breakdown from that weekly pattern will trigger on a drop below $3,260. That is also the low price of the pennant formation. Given dual bearish triggers, bearish momentum may spike if a drop below $3,260 is triggered.
Lower Price Targets Include $3,073
Since the weekly shooting start breakdown would put gold back into the range of the smaller (blue) channel, there would be the potential to eventually test the lower channel line as support. If reached, that would put the price of gold around the 50-Day MA, currently at $3,067, which the 78.6% Fibonacci retracement is at $3,073.
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