Gold (XAU/USD) remains under pressure following a failed breakout attempt, with key support holding at $3,342 and bulls eyeing a fresh rally if the price clears resistance near $3,451.
Key Highlights:
- Gold dropped to $3,352 on Thursday after peaking at $3,439 on Wednesday.
- Price action continues to consolidate within a bull pennant pattern.
- A confirmed breakout above $3,451 could spark a move toward $3,578 and potentially $3,595.
- Key support zones include the 20-day moving average at $3,342 and a recent low at $3,366.
Technical Overview: Gold Consolidates, But Bullish Structure Intact
Gold failed to sustain Tuesday’s breakout above the bull pennant, sliding back within the pattern. Thursday’s decline found support near the previous consolidation zone, with further downside limited by the 20-day moving average at $3,342 and the lower boundary of the pennant.
A notable technical signal is the recent convergence of the 20-day and 50-day moving averages around $3,338—similar to a setup seen during January’s breakout. This compression in price and volatility suggests a larger move could be ahead.
Breakout Trigger Levels to Watch
- 🔼 Bullish Breakout Trigger: A move above $3,439–$3,451 would confirm a breakout from the pennant, opening the door to test April’s record high near $3,500.
- 📈 Upside Targets:
- First: ABCD pattern projection at $3,578
- Extended: 227.2% Fibonacci extension at $3,595
However, a weekly close above $3,377 is needed to confirm a bullish continuation on the weekly timeframe.
Key Support Zones
Despite the overall bullish structure, failure to hold above the following levels may signal a deeper correction:
- ⚠️ $3,366 – Minor swing low support
- ⚠️ $3,342–$3,338 – Converged 20-day and 50-day moving averages
- ❌ $3,247 – Higher swing low; breach here invalidates bullish setup
Bottom Line
Gold remains in a technical consolidation but still shows potential for a strong upside move. A decisive breakout above $3,451 could fuel the next rally leg, while a drop below $3,366 would raise the risk of a bearish reversal.
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