Gold (XAU/USD) has made a significant move on the hourly chart, decisively breaking below a clear Head and Shoulders pattern. This bearish technical development suggests that the yellow metal may be in for a near-term correction after its impressive recent rally.
Key Technical Breakdown:
- The Head and Shoulders formation was confirmed by a clean break below the neckline, which was previously acting as strong support around $2,880.00.
- Price also violated the most recent higher low, a critical structural level that bulls needed to defend to maintain upward momentum.
- The impulsive nature of the drop signals increased bearish pressure, potentially paving the way for further downside.
Possible Near-Term Targets:
If the bearish momentum continues, we may see gold targeting:
- $2,880.00 as the next key psychological support level.
- Deeper corrections toward $2,850.00, aligning with prior demand zones.
Bullish Scenario:
If gold manages to recover and reclaim the neckline level above $2,896.00, it could signal a potential reversal and invalidate the bearish continuation.
Traders should watch for confirmation of further selling pressure or a possible recovery near these key levels. For now, the technical breakdown suggests that caution is warranted for bullish positions.
Disclaimer: For educational purposes only. Trading comes with substantial risk, leading to possible loss of your capital. Traders are advised to do their own due diligence before investing.
