Gold is trading at the $1,718 level and it maintains a bullish outlook, even if the rate is trapped within a down channel. The descending channel could be considered as a continuation pattern if the yellow metal registers an upside breakout.
The gold price is still bullish despite a drop below the $1,700 level. Dovish Fed's rhetoric could accelerate the current bullish momentum. The price will be driven by the fundamental factors today, Thus, the US CPI data and the FOMC meeting results may shake the markets. The yellow metal price is advacning as the USD continues droping against its rivals.
Gold rebounded after a false breakdown with a great separation below the median line (ML) of the descending pitchfork and after the failure to reach the $1,666 static support. The price could approach the upper median line (UML) and the R1 ($1,729) level soon, but only a valid breakout above these upside obstacles will confirm a larger increase in the short term.
As you can see on the H4 chart, the upper median line (UML) represents a strong dynamic resistance, so another rejection or a false breakout could attract the sellers again. Also, if the price fails to reach the near term resistance levels, it could sharply drop.
The price is trapped between the upper median line (ML) and the median line (UML). The fact that the price touched the median line (ML) signaled that Gold could drop deeper within this channel, within the descending pitchfork's body. However, a valid upside breakout could invalidate a larger drop and will signal a potential increase towards the $1,800 level.
- GOLD Trading Tips
Another buying opportunity will arise if the gold price makes a valid breakout above the upper median line (UML) and above the R1 ($1,729) level. The targets are seen at the R2 level (1,774) and higher at the $1,800 psychological level.
In the short term, the yellow metal could decrease if it fails to reach the near-term resistance levels, or if it registers only a false breakout above these obstacles. The support is seen at the $1,700 level. A drop and stabilization below this level could attract more sellers.
However, a larger drop, corrective phase, will be validated only after a valid breakdown below the $1,666 static support and below the median line (ML) of the descending pitchfork. We can sell from below $1,666 with downside targets at $1,600, $1,555, and lower at the $1,484 level.
