Diamond patternPattern Description:
The chart shows a classic diamond pattern that has formed in the price of gold. This pattern is a reversal formation, where the price initially expands in a diamond shape and then contracts until a breakout occurs.
Analysis of the Movement:
Diamond Formation:
The pattern started to form around mid-November 2024 with the upper vertex of the diamond reaching a high of $2,730
The bottom of the diamond was established at $2,479 marking the initial support of the pattern.
Breakout to the Downside:
The breakout of the diamond support was confirmed when the gold price fell below $2,479
This breakout is a strong bearish signal, indicating that selling pressure has outweighed buying pressure.
Fibonacci Levels:
Following the breakout, the gold price has touched several Fibonacci retracement levels:
$2,663 (approximately 38.2% retracement from the diamond high to the low)
$2,631 (approximately 50% retracement)
$2,603 (approximately 61.8% retracement)
$2,584 (approximately 78.6% retracement)
These levels have served as temporary resistances during the fall, but the price has continued to decline, reinforcing the validation of the breakout.
Future Projection:
Given the strength of the breakout and the respect of the Fibonacci levels, the gold price is likely to continue seeking lower levels. The next target could be the previous low around $2,480 or even lower levels, depending on the continuation of the selling pressure.
Conclusion:
The breakout of the diamond pattern to the downside in gold suggests a continued bearish trend. Traders should pay attention to the mentioned support levels and consider short positions as long as the price does not break significantly above the original breakout level (2,480 USD).
Recommendation:
Entry: Consider short positions near Fibonacci resistance levels, especially if there is rejection at these levels.
Stop Loss: Just above the diamond breakout level to protect against a possible reversal.
Take Profit: At significant support levels or at previous lows.
