Spot gold is a market the research desk has watched closely over the past week. And for a good reason.

Price action on the weekly timeframe, aided by early negative divergence from the Relative Strength Index (RSI), recently greeted resistance from $1,988, a base that may concern breakout buyers beyond the $1,959 February peak. However, let’s not forget that the yellow metal is technically trending north, visible on both the weekly and daily timeframes (check out the Golden Cross on the daily timeframe), consequently backing a bullish bias.

Out of the daily timeframe, recent price movement—between support and resistance at $1,949 and $1,998, respectively—has pencilled in the early stages of a bullish pennant pattern between $2,009 and $1,934. Traditionally, pennant patterns and flags are considered continuation configurations, supporting the underlying trend. I believe some refer to these as ‘half-mast’ patterns, as they can mark the 50% point of an uptrend. While the current pennant is preceded by a strong upside move: the pole, we must always remain mindful of the surrounding technical space. It is also worth noting that the daily chart displays negative divergence from the RSI.

Moving across the page to the H1 scale, you will note price ventured below ascending support taken from the low $1,885 On Monday. We can also see that the unit rebounded from support at $1,945 as we transitioned into US hours; this should not (technically) surprise us as this level shares chart space with the daily timeframe’s support noted above at $1,949.

As a result, given the above analysis, the charts still lean in favour of buyers, it would seem. Bolstering a bullish position, we have clear support on the daily chart at $1,949 and early signs of a daily pennant pattern that can prompt abrupt upside breakouts. Adding to the bullish narrative is the uptrend on the bigger picture, and H1 support recently made an entrance at $1,945. Nevertheless, buyers will still likely be cautious regarding nearby weekly and daily resistances and negative divergences from the RSI. Longer-term buyers may seek a daily close above the daily pennant pattern to help confirm bullish intent, while short-term buyers might target a H1 close above resistance coming in at $1,966 before pulling the trigger.

Chart: TradingView

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