Gold correction may be over
The price of dollar denominated gold has corrected back to trend line support. IG's senior analyst Shaun Murison applies some technical analysis to the chart.
The price of dollar denominated Spot Gold has corrected back to trend line support. Circled red we see a bullish hammer forming at trend line support.
The trend line highlights that the longer-term trend for gold remains up. The last few days of decline has seen a short-term correction of this uptrend. The hammer is a suggestion that the correction of the uptrend may now be over. It is important to note that at the time of writing the hammer is not yet complete, as this is a daily chart and the day is not yet complete. For confirmation and completion of the pattern we would like today’s candle to remain as a hammer formation. This would be a candle (like is current) with a long lower wick and close nearer to the high of the day than the low of the day.
Should the pattern complete 1980 would be the initial upside target from the move. A close above this level would consider the high at 2070 as a further upside target. Should the reversal not complete and the price instead move below trendline support, 1815 becomes the next downside support target for the price of gold.
In either scenario we continue to favour a bullish bias to trades on gold at present.
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