Shooting star on gold's chart: sign of bearish reversal ahead?
04 May 2023
On Thursday, we witnessed some remarkable moves on gold who is currently experiencing high volatility. Today's candle could be crucial in setting the sentiment for the upcoming days and weeks. Sellers have a huge chance to initiate a bigger bearish reversal - let's see how they play this one.
During today's Asian session, gold spiked and managed to set new long-term highs, coming close to the round barrier of 2080 USD/oz. The price was, however, quickly rejected and the area (lavender) remains a key resistance level, established by the top from March 2022 and 2023. Currently, the daily candle is shaped like a shooting star with a very long head. This type of candle with this type of resistance has a big chance to start a bearish reversal. Sellers should fight to close this candle at or near the current levels, or possibly even slightly lower.
In case we do get a proper shooting star, where should we expect a legitimate target for this drop? The first idea would be the 23.6% Fibonacci retracement level which also happens to be the low from the second half of March. I would say that this is the minimum target and there are high chances of seeing it in the next days and weeks.