In today’s technical focus, we take a look at gold, where Monday’s session closed with a bearish engulfing pattern — a notable development given its placement on the long-term daily chart.
The bearish engulfing, highlighted with a green rectangle, didn’t occur in isolation. It formed right on top of a major blue horizontal resistance level, which has already rejected price action in April, May, and June. The fact that price failed here again in July reinforces the strength of this resistance and adds weight to the reversal signal.
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The pattern signals growing seller momentum and opens the door for a deeper correction.
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The next key level to watch is the red uptrend line, which has been guiding gold’s longer-term move higher.
If price reaches that red trendline and closes a daily candle below it, we’ll have a strong confirmation of a long-term sell signal.
Until that break occurs, gold remains in correction mode, but buyers are losing control — and the technicals suggest further downside is likely.