XAUUSD (gold) has had an impressive run.
I first mentioned this falling wedge, also known as a bullish continuation pattern, in the November 16th forecast video.
The pair was trading at 1467 at the time, but the idea was there.
I also discussed the bullish potential on December 14th and again on the 17th just before the pair confirmed the breakout.
Our trigger for the move higher was the confluence of resistance at 1480, which fell on December 23rd.
What followed was a nine-day win streak that took XAUUSD from 1485 to 1586.
But the 1550/5 region was always my target here so that extra push above it was the icing on the cake.
Today’s price action, on the other hand, is showing signs of weakness.
This isn’t a surprise because, as I just mentioned, XAUUSD has been virtually straight up since December 23rd.
So a pullback shouldn’t come as a surprise to anyone.
Not only is Wednesday’s price action carving a bearish rejection candle, but it’s also engulfing the previous two sessions.
Furthermore, a daily close below the 1550 to 1555 area would help confirm the pair’s reversal potential.
That 1555 level capped the XAUUSD advance last August and September.
But even if the pair stays above that region, the over-extended position of gold combined with Wednesday’s selloff looks relatively bearish.
The question now is whether or not gold will stay constructive as it has since it bottomed in the second half of 2018.
In other words, should you sell the rip or buy the (upcoming) dip?
We need more information to answer that.
For now, though, I do anticipate a pullback from XAUUSD, at least down to 1515 and perhaps even the breakout level at 1480.
Just keep in mind that the uptrend that began in 2018 is very much intact.
Only a move below the last major swing low at 1450 would change that.
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