Gold Price Forecast: Bear Flag Pattern Signals a Possible Continuation of the Downtrend

50-day MA resistance

The area to watch for potential resistance is around the 50-day moving average, as a daily close above would be a sign of strength. Since the line was successfully tested as resistance last Friday at the high of 2,666, it could represent resistance again. Additionally, there is potential to reach the top of the flag as well as the high of 2,666. There is currently a higher daily low within the flag at 2,622 and therefore a fall below this price level would be bearish. Previous signs of weakness can be seen around the lower parallel line or the 20-day MA.

Lower swing high followed by bearish behavior

Since last week’s swing high marked a lower swing high, there is a possibility of a bearish continuation of a developing ABCD pattern (orange). When the Bear Flag is triggered, the probability of reaching lower targets increases. The previous swing low of 2,537 connects to the 50% retracement level at 2,534. Further down is a potential support area of ​​2.4873 to 2.470, consisting of the 61.8% Fibonacci retracement or the target of a falling ABCD pattern.

200 day MA down at 2,441

The long-term trend indicator, the 200-day MA, is slightly lower at 2,441. This moving average is important to the long-term gold trend. Note that the line was recaptured in mid-October 2023. There were then several tests of the line as support and price turned upwards each time. However, the current decline raises the possibility of a further test of the 200-day line as support after a strong increase and a move up and away from the line. Given the bearish short-term implications mentioned above, the possibility of gold testing support around the 200-day line at some point must be considered.

You can find an overview of all current economic events in our Economic calendar.