Gold Inside Candles#gc1! #gold – After last week’s market selloff which dropped gold price with it, gold created an inside candle on Monday which could be an indication of a reversal back to the upside ahead.
An inside candle is formed when price trades within the high and low range of the previous candle, making the candle an inside candle. The inside candle is therefore a two candlestick price pattern. An inside candle is also similar to a bullish or a bearish harami candlestick pattern. The main difference being that with an inside candle, the highs and lows are considered while the real body is ignored.
An inside candle is generally considered to be a reversal pattern formed when the second candle or candlestick is engulfed within the previous candlestick’s high and low.
In this gold chart, Friday’s selloff is the first candle in the inside candle pattern shown with two red lines extending from its high and low. Mondays candle is completely inside Fridays high and low and is a long-legged doji candle, where price has a small body and two long wicks extending above and below it. These long wick represent traders attempting to push price higher and lower on Monday, but ultimately closing price near the open which creates a small body. Doji candles represent trader indecision and indicate that they were mostly undecided as to which direction to move price during the course of the day.
The most recent candle, Tuesdays, is also creating another inside day for now as it is trading inside of Mondays total price range indicated by yellow lines.
What we want to see going forward in the immediate short-term is for a price move above Mondays high in price, or above the upper yellow line of Mondays doji candle. From there, a move above Fridays high in price(upper red line) would be further indication that gold traders are still bullish and ready to take price higher.
The overall view on gold remains bullish.
