(MENAFN- DailyFX) Gold Technical Forecast: Bullish
- XAU/USD pivots higher, confirming a long-term trendline within its descending channel
- Gold prices gained over the last week and now face resistance in a Double Bottom Pattern
Gold prices put in a second consecutive weekly gain, rising to the 50-day Simple Moving Average (SMA) on Friday. April began with a supportive bounce from the lower bound of a descending channel that has been in play since August when XAU/USD made an all-time high. Consequently, that move confirmed a longer-term trendline, stemming from May 2019.
While gold prices continue to trade within the lower range of its descending channel, the path higher appears to be clearing for the yellow metal. The longer-term trendline (green line) may help guide XAU/USD higher as price action continues to develop. Breaking above the 50-day SMA may see a more pronounced run higher, perhaps putting the psychologically imposing 1,800 level on the cards for the upcoming week.
XAU/USD Daily Price Chart
Chart created with TradingView
Moreover, the path higher may quickly clear if prices can defeat the neckline of a Double Bottom pattern now in play. The pattern, which appears as a W letter, is defined in gold with the neckline at 1755.50, and two bottoms - indicated by green circles on the chart. If XAU manages to break this neckline, a subsequent rally could quickly develop. Until a break above the resistance level manifests, the reversal higher is unconfirmed, and gold may trend lower if unable to do so.
Gold 8-Hour Chart - Double Bottom Pattern
Chart created with TradingView
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--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
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