Multiple Pattern Combinations Pointing to Higher Prices

Commodity

Summary:

Gold prices have broken through recent bearish technical patterns, with the potential for gold to once again surpass historical highs.

BUY XAUUSD

Close Time

CLOSED

2395.94

Entry Price

2526.00

2345.00

4533.34 +53.36 +1.19%

509.4

Pips

Loss

2345.00

Exit Price

2395.94

Entry Price

2526.00

Fundamentals

Gold prices surged last week after a significant breakout from a falling wedge pattern, pushing the weekly RSI into deep overbought territory by Wednesday. It marks the current upward momentum as somewhat exhausted. However, other momentum indicators continue to support further bullish advances.

Reviewing the daily chart, when gold failed to hold above the $2,400 level, it triggered a strong pullback, causing gold to drop $100 within a relatively short period. But just as gold bulls failed to gain acceptance above $2,400, bears also struggled to gain acceptance below $2,300.

After gold's daily closing price dipped below this level, buyers reestablished support above it over the following days, continuously building positions amidst the backdrop of higher lows. This price action formed a falling wedge pattern in the daily chart, with bears showing more aggression near the highs or resistance levels but suddenly turning passive near the lows or support levels.

Looking ahead, the key question is whether the bulls have enough momentum to push the weekly closing price above $2,400. Previous tests by the bulls above this level encountered swift pullbacks, with the second test also showing lower highs. This provides a backdrop for further upward movement, as the price continues to build strength with each successive low. If gold bulls can maintain higher prices before the weekly close, it would indicate a strong response to the correction that began a month ago.

Given that prices reached a new historical high above $2,432, we believe this is not the ultimate target. Before testing the final target of $2,526, bulls need to break through new resistance levels at $2,452 and $2,475, respectively.

Multiple Pattern Combinations Pointing to Higher Prices_1

Technical Analysis

From the 4-hour chart perspective, gold has been on a steady rise since breaking out of the falling wedge pattern, forming an upward trend channel. The bullish outlook remains intact as the price is above the 100-week SMA, indicating the path of least resistance is upward.

In the short term, the target for the upside is the psychological level of $2,400. Should this level be breached, gold prices are expected to further rise to the next resistance level at $2,415 given the daily major uptrend, a level that has reversed prices twice in April. Subsequently, gold prices may attempt to retest the historical high of $2,432 and eventually lay the groundwork for breaking the $2,500 integer mark.

In the bearish scenario, the first downside target to watch is the lower boundary of the uptrend channel at $2,356. Below that is the 100-week SMA at $2,340. Any subsequent selling pressure below these levels could potentially push gold prices back to $2,300. In terms of trading, buying the dips is recommended.

Trading recommendations

Trading Direction: Long

Entry Price: 2383

Target Price: 2526

Stop Loss: 2345

Valid Until: 2024-06-01 23:55:00

Support: 2381, 2371, 2356, 2340

Resistance: 2392, 2400, 2415, 2432

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