Gold Ends Week in Bullish Technical Position
Gold will end the week in a slightly bullish position on both the daily and weekly timeframes. On Friday, it retraced this week’s upswing to a 61.8% Fibonacci retracement. Following the day’s low of $4,655, gold rallied intraday to a high of $4,971. This reflects the likely completion of a minor retracement. Gold was positive on Friday and on track to close in a bullish position near the high of the week at $5,092. Also, Friday’s advance recovered the 20-day average, showing another bullish sign.
Daily Chart Shows Developing ABCD Upside Pattern
Starting with the daily chart, a potential rising ABCD pattern is forming, with a second leg up expected, unless there are signs of failure. Friday’s high established a potential higher swing low of $4,655. But first the pattern needs to confirm with a rise above the lower swing high at $5,092 from this week. Resistance was seen near the 10-day average, as it was clearly tested on Wednesday and Thursday.
Upside Breakout Confirms Recovery and Fibonacci Targets
Therefore, an upside breakout above the swing high will also confirm a recovery of the 10-day average, now at $5,016. A 61.8% Fibonacci retracement target is at $5,141, but it should easily be surpassed. A sustained break above the level would leave gold in a position to test resistance near the 78.6% Fibonacci retracement at $5,342.
Weekly Chart Highlights Major Support and Hammer Setup
Next, let’s consider the weekly chart. It more clearly shows the potential significance of this week’s support at a low of $4,002. The confluence of several indicators marks that price zone as a possible support area. Buyers responded by taking back control and leaving gold in a position to complete a bullish hammer weekly candle pattern. A breakout above this week’s high of $5,092 confirms the pattern. However, the week shows a relatively wide range. So, it wouldn’t be surprising to see short-term weakness before a breakout. Nonetheless, initial upside targets remain the same.
Bullish Hammer Counters Prior Shooting Star Signal
There is an interesting pattern formed on the weekly chart. Last week formed a bearish shooting star that triggered to the downside this week. It suggests a bearish reversal with further downside than what has occurred so far. However, this week’s price behavior counters last weeks, as a bullish hammer formed on the weekly timeframe. Consequently, a weekly breakout triggers a bull hammer and a failure of the bearish shooting star signal.
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