Gold’s double-top pattern signals a potential drop ahead

XAU/USD chart and technical analysis

Gold made a significant rally gained $42 and reached a major daily resistance area of $2,055 in two days. However, the price is facing rejection from the resistance area and despite multiple attempts price was unable to break above this level.

Price made a double-top on the daily time-frame which is a bearish reversal pattern and a potential drop will likely follow.

Gold already dropped by $10 and would likely further drop to $2,012 support level in the coming days. The market structure is already turning bearish on 30-minute and hourly time frames.

Gold fundamental analysis

The recent rally of gold was mainly driven by the decline of the US dollar index which dropped to a three-month low. I am expecting the price of gold will drop in the coming days the US dollar index will likely make some bullish retracement. However, the overall trend will remain bullish in the longer term and the price of gold could reach a new all-time high.

Moreover, the jobless data will be published today which will have a substantial impact on the price of gold. If the data turns out positive it will strengthen the price of the US dollar and the price of gold will drop and if the data turns out negative it will push the price of gold upward.

Gold to US dollar trade idea takeaways

•  The price of Gold will possibly drop to the $2,012 support level in the coming days.
• The price will possibly reach the $2,045 resistance level before the drop.
• Multiple take-profit levels have been added to secure profit along the way.
• The risk-to-reward ratio on this trade is 1:4.
• The entry and stoploss prices have been placed at secure levels with the least probability of getting hit.
• Good luck!