Gold technical analysis: Gravestone Doji indicates scope for a deeper pullback

Gold is looking heavy, having created a Gravestone Doji candle on Monday.
The metal failed to close above $1,535 on Monday, a sign of buyer exhaustion.

Omkar Godbole FXStreet Contributor

Gold could fall back to $1,500 in the short-term, as the daily chart is reporting a topping pattern.

The yellow metal created a Gravestone Doji on Monday, which occurs when the open, low, and closing prices are all near each other with a long upper shadow. (Prices rose to a high of $1,555 before closing on a flat note at $1,527).

Gravestone Doji is widely considered an advance warning of an impending bearish reversal, especially if it appears following a notable rally. In Gold's case, the Gravestone Doji has appeared following a solid rise from $1,270 (May 21 low) to $1,555.

Also, the metal failed to close above the previous higher high of $1,535 (Aug. 13 high) on Monday, which indicates buyer exhaustion.

As a result, a deeper correction to $1,500 could be in the offing. As of writing, Gold is changing hands at $1,528 per Oz.

Daily chart

Trend: Bearish

Pivot points

1. R3 1575.51
2. R2 1565.07
3. R1 1546.25
PP 1535.81
1. S1 1516.99
2. S2 1506.55
3. S3 1487.73

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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