Gold Price Forecast: Gold Weekly Evening Star Casts a Large Shadow

[MongiIG]

GOLD TALKING POINTS:

• Gold prices just completed an evening star on the weekly chart, a pattern often followed with the aim of bearish reversals, hypothesizing that a top may have been set.
• The hurried momentum from early-March has now been entirely erased and Gold prices are trying to buoy around support in the 1900 zone. Shorter-term keeps the door open for bullish scenarios but longer-term retains a bearish leaning due to that bigger-picture reversal formation.
• The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

Gold prices are starting the week at a key spot of support, just above the psychological level of 1900 that was re-tested on FOMC day last week. The low in Gold printed at around 2:20 last Wednesday, so after the statement release but just before Chair Powell took the podium to begin the press conference. During the press conference, buyers jumped in as shorts quickly covered and prices pushed right back to the short-term resistance level of 1930. While buyers were able to extend that move up to 1950, they weren’t able to negate the evening star reversal pattern that’s built on the weekly chart.

The evening star pattern is followed for bearish reversals, driven by the idea that price action may have set a top.

GOLD WEEKLY PRICE CHART

Chart prepared by James Stanley; Gold on Tradingview

GOLD SUPPORT

At this point there are two notable longer-term levels that are playing a role with short-term price action, and for sellers, they’re going to want to see these levels dealt with first before adopting bearish momentum strategies. The first level is helping to set support this morning and it’s at 1919, which was the yearly high until the recent bullish breakout. And below that we have the psychological level at 1900 that came into play very briefly last week. Sellers pushing below 1919 opens the door for a test of 1900, and sellers pushing below that opens the door for a move down towards 1845, where there remains some unfilled gap from February trade.

GOLD DAILY PRICE CHART

Chart prepared by James Stanley; Gold on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com. 21st March 2022