Gold Price Forecast: Bear Flag on Deck

Look for a bearish confirmation

If the breakdown continues, the recent swing low of 2,605 should be crossed to the downside. The bear flag is included in a larger, developing bearish pattern that is reflected in a decline

ABCD pattern. That should increase the chance of gold hitting lower targets as sellers regain control. In other words, when the downward momentum increases. Additionally, there was a sharp decline in gold prices for a day before the flag was formed. The sharp decline created a clear flagpole. An initial lower target for gold is near the recent swing low of 2,536. This swing low completed a 50% retracement. With only one day left in the week, Gold is well on its way to completing an inner week.

The falling ABCD pattern suggests a potential of 2,470

The developing descending ABCD pattern points to an initial lower target at 2,470. With the bear flag accompanying the ABCD pattern, it appears to increase the chances of gold testing the 2,470 price zone before the current correction is completed. Of course, support around the 50% level at 3,522 or slightly below may be enough to halt the decline and lead to a bullish reversal. This will be the next key pivot point as the flag collapse continues.

If the breakdown does not progress and there is instead a rally above the four-day high of 2,657, the flag will continue to develop. Key potential resistance would then lie around the 50-day MA at 2,668 and last Friday’s high at 2,666.

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