The price of gold bounced recently from below $1,700, bringing hope to bullish traders. For many, the correction from the highs looks like a bullish flag, and every lower low that the market makes is viewed as an opportunity to add gold to the portfolio.
However, the gold price remains bearish, despite bouncing from support. It formed a possible double bottom below $1,700, but the bounce had little or no follow-through. As such, the pressure remains for another move lower.
If we look at the bigger picture, the price of gold reacts from previous resistance turned into support. $1,700 was a key level on the move to the upside when the pandemic started, and now the same level proves to be an important support.
Gold Price Technical Analysis
Gold remains bid in the short term, as the $1,700 support still holds. However, bears may want to sell once the market moves back below $1,700 as the chances are that the price will form a triangle and not a double top.
To trade it, bears may want to wait for the price to close below $1,700 on a daily basis and sell short with a stop at the previous lower high. As for the target, a risk-reward ratio of 1:2 or even higher should do the trick.