Having clocked a weekly high/low of $1,340/$1,313, gold (XAU/USD) is set to end the week on a flat note at $1,322.
So, the metal is creating a doji candle on the weekly chart, which indicates indecision in the marketplace. A bullish follow-through next week, i.e. weekly close above $1,340 would signal the pullback from the January high of $1,366 has ended at $1,303 (last week's low) and could yield a re-test of $1,366.
On the other hand, a bearish follow-through next week, i.e. a close below $1,300 would open doors for a sustained drop to $1,260 and beyond.
Further, the daily chart also shows conflicting patterns.
Bull flag pattern
An upside break (on a daily closing basis) would signal a continuation of the rally from the December 2017 low of $1236.50 and allow a stronger rally to $1,496-$1,500 (target as per the measured height method). However, as of now, the target seems far-fetched.
Double top bearish reversal
Many experts feel the price action between Jan. 25 and Feb. 16 looks like a double-top with the neckline support of $1,307. A daily close below the neckline would shift attention to $1,250-$1,240.
So, it is quite clear the yellow metal is caught in a bull-bear tug of war. That said, the recent price action suggests the bulls could soon topple the bears.
Last week's bull doji reversal is intact
Gold witnessed a bullish doji reversal on March 2, signaling the retreat from the Feb. 16 high of $1,362 has ended and the bulls have regained control.
Accordingly, the metal found bids earlier this week, but the ascent was cut short by the ascending trendline resistance on March 6. The subsequent pullback to lows below $1,320 may have weakened the bulls somewhat.
However, the bullish doji reversal pattern (created last week) is still intact and hence the probability of a bull flag breakout is high.It is worth noting that the low of long-legged doji candle (created on March. 1) was $1,303, i.e. near the psychological support of $1,300.
Hence, a close below $1,300 would confirm - bear doji continuation on the weekly chart, the double top bearish breakdown on the daily chart and invalidation of the bullish doji reversal on the daily chart - and could yield a quick-fire sell-off to $1,240.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.