Commodity
by Alex Davies on November 13, 2018

Gold Analysis – flag pattern and a possibility of a breakout

Gold has always been an interesting asset for technical analysis as it reflects the general market sentiment and can be used to draw broad conclusions. Two weeks ago, gold price movement was indicative of a bearish sentiment. The price was expected to decline after a false breakout pattern as it crossed the orange line on the graph below. The price at that time stood at around 1230 USD/oz.

Gold Analysis - flag pattern and a possibility of a breakout

Currently, the price of gold is at 1204 USD/oz, so it did indeed decline per our analysis. The price broke the support line at 38.2% Fibonacci shown on the graph above in orange on November 9. Now, the price is tracing a flag pattern shown on the graph with black lines. This is suggestive of a further decline as it represents a trend continuation pattern. A contributing factor to the decline is the strength of the US dollar. If the price manages to decline below the level of the lower black line of the flag pattern, it will trigger a sell signal. We consider this to be a likely scenario and expect the price to decline in the nearest future.

 

By Alex Davies

Alex Davies is a long-time trader with a background in statistical analysis. Davies has worked as a financial analyst since 2014 and has been writing technical analyses for various publications since 2015. Davies writes on different financial instruments including stocks, cryptocurrencies and currency pairs.

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