Despite a continued surge in Treasury yields through the month of October, Gold bears were unable to break much fresh ground, getting caught at the same spot that set support in late-September.
Bears inability to breakdown to fresh lows has allowed for the build of a falling wedge, and there’s also a possible double-bottom formation at play, which would be nullified by a breakdown if sellers can take-control over the next few days with FOMC and NFP on the radar.
Deduction can be a powerful tool in analysis. If the door is wide open for bears to run through – and they don’t – well there just might be a reason for that. And this may highlight a greater potential for pullback, with ‘may’ being the key point of emphasis. This explains Gold prices in the month of October, when September brought a breach of a long-term double top formation that opened the door for a larger move-lower.
Within the backdrop the source of that bearish drive even remained to a large degree, with US yields continuing their ascent for much of last month. But Gold prices held the lows around the same level that came into play in late-September and, at this point, that begins to set up a possible double bottom formation which is something that could support a larger reversal scenario.
That said – bears can still make a statement here but that would require nullifying the double bottom, which can happen if sellers are able to push a breakdown to fresh lows. And with the Fed on the radar for tomorrow and NFP on the calendar for Friday, that potential certainly exists.
The current line in the sand for Gold is at 1622.
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