- Gold fell below an ascending channel, confirming a bearish flag breakdown.
- The stage seems set for a fall towards $1820 zone en-route sub-$1800 levels.
- Attempted recovery might be seen as a selling opportunity and remain capped.
In this week's #ThrowbackThursday we look back to our bearish view for gold. The attempted recovery from the $1850-48 horizontal support ran out of the steam near a resistance marked by the top end of an upward sloping channel. Given the recent sharp pullback from the $1965-66 region, the mentioned channel constituted the formation of a bearish continuation flag pattern on short-term charts.
The rejection slide from the vicinity of the $1900 mark has now dragged the commodity below the trend-channel support, confirming a near-term bearish breakdown. This, coupled with the fact that technical indicators on the daily chart maintained their bearish bias and are still far from being in the oversold territory, might have already set the stage for a retest of the $1850-48 support.
Some follow-through selling should pave the way for an extension of the bearish trajectory towards the $1820-15 congestion zone. The yellow metal could eventually drop to challenge the very important 00-day SMA support, around the $1794-92 region.
On the flip side, the flag pattern support breakpoint, around the $1875-77 region, now seems to act as immediate strong resistance. Any further move up should be seen as a selling opportunity and remain capped near the trend-channel resistance, around the $1907 area. Only a sustained move beyond will negate the bearish set-up and prompt some near-term short-covering move.