On many instruments, last week brought us reversals. One of the examples is Gold, where the price is taking a break from the heavy drop that we saw recently. Gold is dropping since the 11th of April and the price already declined more than 100 USD. We have some signs that reversal is coming and XAUUSD can shine again soon.
First of all, we reached the 50% retracement of the main uptrend, which at the same time are the lows from December. On the daily chart, the price created a bullish engulfing (2ndand 3rd of June), which is a strong buy signal. What is more, on the W1 chart, the last week ended with a hammer candle, which also is a positive sign. So, we do have a pattern on the daily and weekly chat, what about the lower time frames? Here we have something too! On the H1-H4 chart, price created an inverse head and shoulders pattern. As you can see, the buy signal is supported from all sides.
The positive sentiment will be denied when the price will break 50% Fibonacci, which as for now, is less likely to happen. The potential target is on the 1286 USD/oz.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis