Gold Price Forecast: Gold Trendline Bounce, Possible Double Bottom

Gold Price Forecast: Gold Trendline Bounce, Possible Double Bottom

Last week was two quite different topics in Gold, coalescing across the Q1 close/Q2 open with first weakness clawed back at the end of the week.
That situation is a micronized version of this bigger picture, where Gold was sharply bullish from March to August last year, after which the yellow metal became sharply bearish at the end of 2020 and Q1 of 2021.
Gold price action has set up a potential double bottom formation, which can be confirmed by cost action this week if bulls are able to push the matter, and this might open the door to further topside in Gold in Q2.
The analysis within article relies on price action and chart formations. To learn more about cost action or chart patterns, take a look at our DailyFX Education section.

Gold prices lost as much as 14.4% during Q1, taking the high from January 6th to this reduced on March the 8th. And as the door closed on Q1 and opened to Q2, Gold prices remained on the move, plummeting in the first couple days of this week only to claw back these reductions to complete the week with a small gain ahead of the Friday close.

Coming in to assist with this dip last week was a trendline projection that can be found by connecting swing lows in the previous two years. This also plots very near the 38.2% Fibonacci retracement of the recent significant move, an integral amount that was looked at ahead of last week.

Also of issue to near-term price dynamics in Gold is the bigger-picture appearance, and if what we've seen in Q1 continues to be an expansion of a pullback that began last August -- or if we are seeing a totally new theme in the yellow metal. And to make sure -- that there are starkly different images in Gold depending on the timeframe being viewed at: The daily chart shows what has become a fairly nasty downtrend while the weekly and monthly chart make that downtrend appear much like a pullback at a longer-term bigger-picture motif.

On the monthly chart, we can see where prices are still hovering around the 38.2% retracement of the recent major move, beginning in 2018 and running into last year's August high.

Going down to the Daily graph and we can start to focus-in on that current bearish behavior. Costs have continued to elite new lower-lows and lower-highs so far throughout the early calendar year, and also the 1676 level has become interesting as it is the prices that's helped to mark the March lows.

But what makes it even more intriguing is how a week, buyers stepped in right around this same price which, at the time, was confluent with the trendline projection.

This highlights a potential double bottom pattern, which can be confirmed by a bullish violation of the neckline; and this may open the door for continued topside themes in Gold. What makes this exciting is that such patterns will often appear around changes in trends; and also given the bigger image backdrop around Gold combined with the open of a new quarter, the capacity for change will be in the air, especially when this pattern could fill-in this week.

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