The diamond pattern in gold has played out, but instead of a reversal pattern, it acted as a continuation pattern this time. However, it is possible that the pattern has been completed, and gold could pause its recent rally before resuming its upward bias.
Measuring from the top to the bottom of the diamond to project the move in gold from the breakout point suggests that the yellow metal, currently trading around $3,028 per ounce, has largely hit its objective.
Additionally, gold has rallied beyond its upper Bollinger Band, which is currently acting as resistance and suggesting potential overbought conditions, supported by the relative strength index surpassing 70. With both indicators in overbought territory, gold could be due for a possible pause — either by consolidating sideways for a few days around the $3,025 to $3,050 region or by pulling back to retest the breakout at $2,950.
That is not to say the rally is complete, as the breakout above $3,000 appears significant. After a brief pause, gold could continue rising towards $3,160, based on a projection of the rally that began on 18 December and lasted until 11 February.
Gold falling below $2,950 would be a bearish signal, potentially indicating that the recent breakout was false, which could result in gold pulling back to around $2,850.
Measuring from the top to the bottom of the diamond to project the move in gold from the breakout point suggests that the yellow metal, currently trading around $3,028 per ounce, has largely hit its objective.
Additionally, gold has rallied beyond its upper Bollinger Band, which is currently acting as resistance and suggesting potential overbought conditions, supported by the relative strength index surpassing 70. With both indicators in overbought territory, gold could be due for a possible pause — either by consolidating sideways for a few days around the $3,025 to $3,050 region or by pulling back to retest the breakout at $2,950.
That is not to say the rally is complete, as the breakout above $3,000 appears significant. After a brief pause, gold could continue rising towards $3,160, based on a projection of the rally that began on 18 December and lasted until 11 February.
Gold falling below $2,950 would be a bearish signal, potentially indicating that the recent breakout was false, which could result in gold pulling back to around $2,850.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.