Gold Price Forecast: Bearish Weekly and Daily Patterns Point Lower

Gold consolidated on Friday following bearish signals that triggered both daily and weekly bearish patterns on Thursday. The day is set to complete an inside day pattern taking the form of a shooting star candle. That would establish a potentially bearish setup triggered by a drop below today’s low of $3,223. Gold continues to trade near the lows of the day at the time of this writing.

It may end the day in a precarious bearish position, below the 20-Day MA, now at $3,239. Notice that support around the 20-Day line was tested yesterday and the day ended at support of the line. However, a daily close today below the line would provide a new sign of weakness, suggesting that the bear pennant continuation signal may be ready to continue to the downside.

Sellers Take Control

There are several reasons that selling pressure could accelerate following a drop below today’s low. There is a bear pennant pattern that triggered yesterday, showing a potential target around $3,027. That decline put the price of gold back into a rising trend channel (blue) pattern. Once that happens there is the potential to eventually test the other side of the channel.

This is particularly a risk when the return into the channel’s price range follows a failed bullish breakout, which is the case with gold. Then, there is the failure to retain support at the 20-Day MA, which is now in process.

Weekly Bearish Confirmation

The longer-term weekly pattern is also bearish as a reversal of a weekly shooting star candlestick pattern that formed last week triggered this week. A weekly closing today below last week’s low of $2,260 will confirm the weekly signal. Since the lower target for gold looks to be around the pennant projection of $3,027, higher price zones may not hold as support.

Next Potential Support at $3,168

Two areas of potential support stand out. The first is at the confluence of a prior trend high of $3,168 and the 61.8% Fibonacci retracement at $3,164. Notice that the top channel line (purple) for a larger rising trend channel is currently around that price area. Then, there is the 50-Day MA at $3,086 and the 78.6% retracement level at $3,073. That price zone is near the lower trendline for the blue rising channel.

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