SINGAPORE: Spot gold is biased to retest a support at $1,917 per ounce, a break below which could open the towards a range of $1,905-$1,917.
The metal is consolidating within a triangle, which looks more like a top pattern than a continuation pattern, due to the completion of a five-wave cycle from $1,809.27.
The wave 3 has much extended, leaving little room for the current wave 5 to extend above $1,938.
A bullish pennant will be confirmed once gold breaks $1,938, and a target of $1,960 will be established thereafter.
A break below $1,917 will confirm not only the target of $1,905, but also a reversal of the uptrend.
Spot gold may drop into $1,884-$1,897 range
On the daily chart, the spinning top on Wednesday and the doji on Thursday together form a more bearish harami cross, which is a typical reversal pattern.
A decent correction towards a range of $1,875-$1,898 has become increasingly possible.
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