Gold futures have keyed off of minor resistance created by a Falling Wedge chart pattern, shown here on the 15-minute time interval. This pattern is developing into a sideways consolidation zone, likely building a near term trading range before a significant breakout will occur.
The Falling Wedge is a very clearly organized formation, registering 10 bars for both Uniformity and Clarity, with 8 bars measured from the Initial Trend indicator, and an overall Quality of 9 bars. With such strong internal readings, it is likely the pattern will continue to provide clues as to the next shift in the market trend.
Currently the retracement is projected to move gold futures back to the support level established at $1,360 per ounce, which would potentially complete the pattern and set up a breakout trade to the downside. Should the trend line support hold, a retest of the upper end of the wedge would extend the Falling Wedge, likely making for a significantly higher upside target if a rally were to ensue. Meanwhile, short term swing trading inside the range is anticipated.
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