Gold Price Analysis: Move beyond descending channel awaited to confirm a bullish flag

• Gold extended its steady intraday positive move and refreshed daily tops in the last hour.
• Slightly overbought conditions on the daily chart warrant some caution for bullish traders.

Gold built on its intraday positive move, rather picked up some additional pace during the early North American session and refreshed daily tops, around the $1812 region in the last hour. The momentum, however, failed to assist the commodity to break through a resistance marked by the top end of a near one-week-old descending channel, which constitutes the formation of a bullish flag chart pattern.

The breakout is further reinforced by bullish technical indicators on hourly charts. However, slightly overbought conditions on the daily chart warrant some caution for aggressive bullish traders. Hence, any subsequent move up seems more likely to confront some resistance, instead pause near multi-year tops, around the $1818 region set last Wednesday, amid the prevalent risk-on environment.

On the flip side, the $1800 mark now becomes immediate strong support. Any further weakness might still be seen as a buying opportunity and help limit the downside near the channel support. The said support is pegged near the $1794-92 region, which if broken decisively might be seen as a fresh trigger for bearish traders and wave the way for a further near-term corrective slide.

The commodity might then accelerate the fall further towards the $1781-80 horizontal zone en-route the $1774 level and the next major support near the $1760-58 region.

Gold 1-hourly chart

Technical levels to watch