Gold: Head and Shoulder Shoulders Pattern Completes - What Comes Next?

Upon analysis of the movements of the gold futures, since I wrote my last analysis https://www.investing.com/analysis/gold-these-are-the-key-levels-to-watch-for-now-200654401, I find that the gold futures have completed the formation of ‘Head & Shoulders” pattern in the daily chart indicates a lot about the further directional moves by the gold futures.

On Thursday, the gold futures moved downward after signs of sticky U.S. inflation and a strong economy that sparked doubts over the Federal Reserve’s next step to cut interest rates further.  Undoubtedly the gold futures were trying to recover from the lows tested this week as the news flow on the Israel-Hezbollah ceasefire sapped demand for safe havens.

Undoubtedly, losses in gold were limited as the dollar retreated further from the recent peaks amid doubts over a December interest rate cut.

In such an uncertain scenario, technical indicators define a lot about the upcoming directional moves to test the significant supports and resistances.

Upon analysis of the movements by the gold futures in the 4 Hr. chart, I find that the gold futures are still in the bearish territory since trading below a bearish crossover, formed by the 100 DMA, moving downward below the 200 DMA on Nov. 18, 2024.

Secondly, the gold futures look ready to attempt a bumpy move in the short term as they are holding above the 50 DMA, while the 20 DMA is trying to move above the 50 DMA after a bullish crossover formation in the short term.

In such a bullish move, gold futures could face significant resistance at the 200 DMA at $2692, and the next resistance will be at $2760.


In the daily chart, gold futures are trading above a crucial point at $2645 after the formation of the bearish engulfing, which could push the gold futures towards the immediate support at 100 DMA which is at $2601 as The upside seems to be limited for the gold futures since the significant resistance is at 50 DMA, currently at $2701.

Finally, I conclude that the gold futures could remain in a narrow range before the next breakout or a breakdown before this weekly closing.

Disclaimer: All the readers are requested to take any position in gold at their own risk as this analysis is purely based on the observations of technical indicators.  The author of this analysis does not hold any position in gold.