Gold futures introduction
Building on the November 7 analysis, where we discussed the potential Head and Shoulders (H&S) formation, today’s updated chart confirms resistance at $2,707.6, aligning with the Right Shoulder level. Gold remains in its ascending channel, but a breakdown of $2,542.3, the “Last Support,” would validate the H&S pattern, triggering a reversal with an initial target at $2,300.
Key Developments Since Last Analysis
Resistance at Right Shoulder Confirmed
As predicted, $2,707.6 proved to be a significant resistance, with price failing to break higher. This reinforces the validity of the H&S pattern, making the neckline (around $2,542.3) a critical level to watch.
“Last Support”
The $2,542.3 level is the last line of defense for the bulls, a decisive breach of this level would confirm the head and shoulders pattern.
Potential Targets for Breakdown
If the neckline breaks, the H&S formation could push gold toward $2,300, a strong support zone, with further downside potential toward $2,100.
Bullish Case 📈
- Ascending Channel Support: Gold is still within its long-term ascending channel. Holding $2,542.3 would allow bulls to re-test resistance at $2,707.6 and potentially invalidate the H&S.
- Safe-Haven Demand: Macro uncertainty, such as rising geopolitical tensions, could support gold prices, preserving the ascending trend.
- Trump Presidency: The market is bullish on Trump in the White House, and this is sending capital toward the riskier assets. Less demand is seen for safe havens like Gold, for now.
Bearish Considerations ⚠️
- H&S Confirmation Below $2,542.3: A breakdown would confirm the bearish reversal, with gold targeting $2,300 initially and potentially lower.
- Loss of Momentum: The inability to breach $2,707.6 signals waning bullish momentum, adding pressure to the downside outlook.
Outlook & Summary
- Short-term (1-2 weeks): Watch the $2,542.3 level closely. A hold here could lead to consolidation or a re-test of $2,707.6, while a break targets $2,300.
- Medium-term (1-3 months): A confirmed H&S breakdown could see prices moving toward $2,100, with strong resistance at $2,707.6 capping any recovery attempts.
- Long-term (3+ months): Sustained trading above the neckline and channel support would maintain the bullish structure. However, a bearish breakout would shift the trend entirely.
Final Takeaway
Gold remains on edge, with resistance at the Right Shoulder validating earlier analysis. The $2,542.3 level is now pivotal: holding it preserves the bullish channel, while breaking it confirms the H&S reversal with a target of $2,300. Stay vigilant for key signals at these levels!
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