12.08.201916:30 Forex Analysis & Reviews: Gold follows our expected path but still no break out

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Gold price continues to trade sideways inside the flag pattern. Price is challenging recent highs but caution is advised to traders as there are several warning signs. We should not ignore the possibility of a fake break out.

Red lines - bullish flag pattern

Blue rectangle - major support area

Magenta lines - expected path

Gold price continues to trade inside the range of the flag pattern. Support is at $1,485-90 and resistance at $1,510. Usually a break above $1,510 could give us a target of around $1,600 but with current oscillator conditions, I expect a move to $1,535 to be enough. Bulls need to be very cautious as there are bearish divergence warning signs. Failure to stay above $1,485 would lead to a decline towards the blue rectangle area which bulls must defend. Otherwise the medium-term bullish trend will be in danger and we might see a deeper pull back towards $1,350.

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