Prior to Friday's 1.2% decline, gold prices were on track to post small weekly gains. Prices were trading barely below last week's opening price of 1,694.69, retracing the previous week's 0.78% increase. With prices down more than 20% from the March swing high of 2,070.42, that would represent the lowest weekly close since April 2020.
The possibility of reversing the prior slump that began in March exists when a double bottom pattern forms. The peaks were created by the early October swing high, which was preceded by the lows from last Friday and September. To validate the pattern, though, a resistance break is necessary. Bulls may try to break above resistance if prices rise during the next week, but a sliding trendline could derail the story.
But if prices break through resistance, a breakthrough would probably happen. The 1,844 level represents the breakout goal as determined by the separation between the resistance and trough lows. Relative Strength Index (RSI) bullish divergence indicates that bullish momentum is gaining strength, which is positive for the prospects of the Double Bottom breaking out. The technical view is favorable for upward movement, but traders should wait for confirmation.
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