Gold: 2 bullish tech patterns in focus after FOMC.

January 28, 2016

Gold is trading higher after the FOMC statement and my bullish TC signal is well advanced now. However, there are two longer-term bullish technical patterns still developing on Gold charts that are worth monitoring as the week draws to a close.

Gold weekly: the first pattern to note is one that I have been stalking for many months and that is the bullish-reversal descending wedge on the weekly chart. Price action is edging up closer to the upper wedge trend line that has been in force for over three years! A break and hold above this bear trend line would be a very bullish signal but Gold would then need to negotiate the $1,145 and $1,150 resistance levels:

GoldWeekly

Gold monthly: a more recent pattern is developing on the monthly charts and involves the last three monthly candles. These are currently forming up into a bullish-reversal ‘Morning Star‘ pattern. The last day of the trading month is this Friday and so traders should look after Friday to see how this monthly candle has closed and whether this pattern is valid:

GoldMonthly GoldMonthly

The text book ‘Morning Star’ pattern appears as below. The pattern on the monthly Gold chart has candle 2 as bearish but, as shown below, there are quoted examples of this scenario for Morning Star patterns:

Morning Star

Note the bearish coloured candle 2 in this example. This example is similar to the current monthly set up on Gold.

Morning Star2

TC Signal: The TC signal off the 4hr charts is currently up 200 pips. The daily 200 EMA (green line) is currently giving price action some resistance:

Gold4hr

Ichimoku Charts: Gold is currently trading above the Cloud on the 4hr chart and looks set to close today above the daily Cloud which supports bullish continuation. The top of the weekly Cloud is currently near $1,200 and will be another level to keep in mind here:

Gold4hrCloud GoldDailyCloud GoldWeeklyCloud

GoldMonthlyCloud

Summary: Gold is currently setting up within two bullish-reversal patterns.

  • a descending wedge on the weekly chart.
  • a Morning Star pattern on the monthly chart.

The monthly candle will close after Friday and so traders should check Gold charts after Friday’s close to assess any bullish breakout on the wedge and confirmation of the Morning Star set up.