Gold price has broken above the triangle pattern but has found resistance on the long-term downward sloping trend line. As I mentioned yesterday, we should not forget that this is most probably a bounce inside a bigger longer-term bearish market, so traders should treat upward moves with extreme caution.
Blue line – long-term resistance trend line
Green lines – triangle pattern
Gold price is above the Ichimoku cloud. This is a bullish sign and that is why we finally saw a breakout above the triangle. However the bounce was stopped at the blue downward sloping trend line resistance at $1,110. This pullback towards the cloud support at $1,090 could be a back test of the cloud breakout. Breaking below it will be a very bearish sign as this will be justified as a fake breakout.
Blue line – trend line resistance
The weekly chart as we expected is showing some bullish signs and we should be ready for a bounce higher and maybe towards $1,130-40. The weekly resistance is found at $1,130-40. So even if bulls manage to break above the $1,110 resistance, we should see strong selling pressures come back around $1,130 where we initially started the breakdown of the triple bottom. Support at $1,077 is critical and a break below it will give me $1,040 as 1st target and below $1,000 next.
The material has been provided by InstaForex Company – www.instaforex.com