Gold is presenting a complex but technically intriguing setup. Last week, the precious metal was driven by a classic head and shoulders pattern, marked in green. This formation broke through the red neckline, generating a short-term sell signal that looked promising at first. However, the move quickly lost steam, and buyers stepped back in, reversing the downtrend.
Now, the tables seem to be turning. The latest price action has formed a new inverse head and shoulders pattern, highlighted in blue. This bullish formation comes with an orange neckline, which is being tested as we speak.
The failed breakdown of the earlier bearish pattern is significant—it shows that sellers lacked the strength to follow through, which tilts the momentum back in favor of buyers. The rejection of the bearish structure gives more credibility to this new bullish attempt.
However, for the bullish case to be confirmed, traders should wait for a daily close above the orange neckline. That would validate the inverse head and shoulders pattern and open the door to a strong upside move, potentially starting a new leg in the uptrend.
Until then, we are at a technical crossroads—the pressure is on, and the next move could be decisive.