Recent wave of strengthening of the US dollar has also reflected in the weakening of gold. GOLD quotations have been in a strong downtrend since March this year. Looking at the technical situation on the broad time interval - W1, it is not impossible that a huge double top formation has formed. Thus, currently the key zone is at the level of $1680, which is the neckline for the aforementioned double top formation. In addition, this place has played a key role in the past, acting as both resistance and support. Thus, it seems that a close this week below the zone at $1680 could lead to an acceleration of declines on this precious metal. On the other hand, in the event of a return above and the drawing of a bullish engulfing pattern, this would be a great place to generate a larger rebound. For now, however, the price remains below, so it seems that the continuation of the downtrend, is the base scenario.
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GOLD interval W1. Source: xStation
Looking at the lower time frame - D1, the quotations remain in a steep downward channel. Last week the support zone at $1680 was overcome, which is currently acting as resistance. According to the classic tenets of technical analysis, as long as the price remains below, a continuation of the downtrend should be expected. In order to determine the potential range of the current impulse, it can be compared to the previous two (marked with blue lines). If history were to repeat itself, even towards the support zone at $1602.50 is not out of the question. This place is due not only to the equality with the previous two pulses, but also to the external 161.8% Fibo retracement, which was determined by the last upward correction.
GOLD interval D1. Source: xStation
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