Bearish Short-term Behavior

Bearish behavior today confirms a lower swing high on the daily chart from last Thursday. A lower swing high could lead to a lower swing low. Last week a higher swing low was established at $3,247. However, there is also an interim swing low from late May at $3,245. So, a decline below the lower price level would indicate a failure of support at those two swing lows. If that occurs, then selling pressure may intensify as it would signal likely further weakness as the near-term uptrend losses momentum.

Bullish Above $3,366

Nevertheless, an upside breakout above last week’s high of $3,366 will trigger a bullish reversal in gold. Both a weekly high will be reclaimed, plus a short downtrend line and 20-Day MA, now at $3,349. Although the uptrend has been testing dynamic support recently and it continues to do so, the near-term bull trend, starting from the November swing low, remains dominant unless there is a drop below $3,245. Key resistance for gold is at the June lower swing high of $3,451. But before that swing high is challenged an interim swing high at $3,396 needs to be exceeded.

Pennant Consolidation Not Complete

Another way of considering the consolidation pattern that has been forming for several months is that it is a large bull pennant pattern. The boundaries of the pennant are marked with purple lines on the chart. It shows that gold could continue to consolidate within the pennant for an estimated two or three more weeks before it may be ready to break out.

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