Strong Dollar Pressures Gold: Is a Short-Term Sell Opportunity Emerging?
07 October 2024
In today's technical analysis, I want to focus on gold, which has been shining for the past few weeks, riding a solid uptrend. This uptrend has been supported by the green uptrend line, and for the past two weeks, we have observed the formation of a pennant marked with blue lines. A pennant is typically a continuation pattern, meaning that, theoretically, it should lead to an upside breakout.
However, we are currently testing the lower line of this pennant, and sellers seem to be gaining strength. This selling pressure aligns with the stronger US dollar following the impressive Non-Farm Payrolls report. My view is that there is a higher probability of a downside breakout from this pennant, leading to a short-term correction in the ongoing bullish trend. The target for this downswing would be the green uptrend line, which should serve as support.
If the lower line of the pennant is broken, it will serve as a signal to sell for a short-term correction. On the other hand, if the upper line of the pennant is broken, that would give us a signal to buy, but at this moment, the likelihood of that happening seems rather limited.