The Medium Term Gold Tendency Is Bearish

That tendency is particularly noticeable if you examine the largest, monthly time frame.

Gold has been moving within a wide consolidation for the past few months, and during the past five months it has been developing the barbed wire candlestick formation a little above the middle line of the Bollinger Bands indicator, which is essentially a MA20 indicator and often work as a magnet, drawing the price as either a strong resistance or a strong support level.

After the barbed wire has finished forming there is usually a sharp movement in either direction.

If we look at the smaller, weekly time frame, we will notice that Gold is trading within a trend channel which so far is developing as a flag, but the price has reached its trend lines only three times. We can conclude that the flag isn’t fully developed and there will be a possible movement to the resistance trend line.

More important, however, is in which direction there will be a breakout. In case it is to the downside, we can expect a drop to the historical low from 1^st December 2015 at $1046.14.

In the alternate scenario there will be a breakout to the upside and a new rally, but that scenario is less probable for the moment.