Gold technical analysis: Bearish outside bar reversal favors drop to $1,480
|- Gold confirmed a bearish outside bar reversal with a close below $1,504 on Monday.
- The daily chart MACD is about to cross below zero. That would indicate a bullish-to-bearish trend change.
- A drop to the immediate support of $1,480 could be seen in a day or two.
Gold closed well below $1,504 on Monday, validating the bearish outside bar candlestick pattern created on Friday.
A bearish outside bar candle occurs when the price action for a specific day falls outside the high and low of the preceding day. That candlestick is widely considered a sign of indecision in the market place.
However, in Gold's case, that pattern indicated bullish exhaustion. After all, the outside bar appeared following a near 90-degree rise from $1,400 to $1,535.
Traders usually wait for confirmation of bearish reversal, preferably in the form a close below the outside bar's low.
As noted earlier, Gold found acceptance below $1,504 (outside bar's low) on Monday, confirming a short-term bullish-to-bearish trend change.
Supporting the case for a drop to the immediate support of $1,480 (Aug. 13 low) is the impending bearish crossover on the moving average convergence.
The bearish case would be invalidated if prices rise above Monday's high of $1,513. As of writing, the zero-yielding safe-haven metal is trading largely unchanged on the day at $1,495 per Oz.
Daily chart
Trend: Bearish
Pivot points
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