Technical Market Outlook and Review: Although the price of gold is higher this week, momentum has been sluggish

XAU/USD (Gold)

Although the price of gold is higher this week, momentum has been sluggish, consequently establishing a potential bearish flag pattern on the daily chart between $1,881 and $1,862. Rupturing the lower boundary, the said pattern not only permits chart pattern traders to project the pattern’s profit objective, it also exposes the 50-day simple moving average at $1,851 and support coming in at $1,828, which happens to join hands with a 38.2% Fibonacci retracement ratio at $1,827. Also of technical significance on the daily timeframe is the Relative Strength Index (RSI), establishing negative divergence and exploring space below the 50.00 centreline (negative momentum).

In terms of trend structure for the daily scale, here is where I left the charts in recent analysis (italics):

The trend is technically higher. The trend reversal presented itself in early December last year following the break of the $1,786 previous high in November 2022. Since then, the precious metal also recently welcomed what is known as a Golden Cross, which is the 50-day simple moving average crossing above the 200-day simple moving average ($1,776). However, should the daily chart develop a lower high and a subsequent lower low, this will inform the market that the precious metal has established a bearish trend reversal. The test for this market, therefore, is at the daily support from $1,828.

Having seen the weekly timeframe’s technical position exhibiting scope to drop lower and cross swords with support at $1,807, a breakout below the daily chart’s bearish flag pattern is in the offing. This is reaffirmed on the H1 scale; price responded to a Quasimodo support-turned resistance at $1,879 and further selling could haul the yellow metal as far south as H1 Quasimodo resistance-turned potential support at $1,857.

BTC/USD

Short-term flow for the major crypto has been working with space between H1 Quasimodo resistance at $23,474 and H1 support from $22,767. Outside of this area, technical elements draw focus to $24,000 and Quasimodo resistance-turned support at $22,490. In view of the recent ranging movement, much of the following analysis will echo thoughts put forward in previous research (italics):

The weekly timeframe:

In the company of the weekly timeframe’s RSI voyaging north of its 50.00 centreline (followed by positive divergence), BTC/USD appears poised to target a falling wedge (between $25,214 and $17,567) pattern’s profit objective at $25,698, closely trailed by resistance at $28,844.

The daily timeframe:

In light of last week’s bout of selling (down 3.4% and snapping a 4-week winning streak), the support level at $21,924 is a reasonable downside objective on the daily chart and might be enough to prompt dip buying. The fact that the Relative Strength Index (RSI) exited overbought space after reacting from overbought resistance at 89.35 supports selling towards the daily support. An additional technical (bullish) observation on the daily chart bolstering $21,924, of course, is the Golden Cross (the 50-day simple moving average [$19,949] crossing above the 200-day simple moving average [$19,725]) which signals that bulls might seek control and a longer-term uptrend may be on the table.

On account of the noted analysis, the daily timeframe informs investors that sellers could remain in command until joining hands with daily support at $21,924. This places a favourable light on the H1 resistance from $23,474 and breakout selling under H1 support at $22,767 towards at least H1 Quasimodo resistance-turned support at $22,490. However, further downside could materialise beyond $22,490 in the direction of $22,000 as this psychological barrier shares a connection with daily support noted above at $21,924.

Charts: TradingView

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