The MT5 daily gold chart continues to look increasingly weak, and even more so after yesterday’s price action which has followed through in early trading today, with the precious metal now looking set to test the key $1300 per ounce price point.

For gold bugs, the start of the year promised much with gold rising steadily from the lows of $1200 per ounce and moving to over $1362 per ounce, since when the metal has tested and retested this region, with the most recent attempt in mid-February. On both occasions, resistance held firm at this level before bearish sentiment prevailed taking gold lower once more. This pattern of failure over the last two months has now developed into a double top of some proportion, with today’s price action now key, and if the $1306 per ounce support region is breached with a close below, the bearish trend may accelerate further.

Within the double top, there have been some classic signals of weakness over the last few weeks, with the first of these occurring at the second top, with extremely high volume and the deep wick to the upper body of the candle. This was followed by rising volumes in the subsequent move lower, and a further sign of weakness then appearing as the price of gold attempted to recover during the day, but closing once again with the deep wick to the upper body on high volume.

Yesterday’s candle and volume reinforced this bearish sentiment as gold attempted to rally once more, only to close near the open on high volume, which is one of our classic VPA entry signals in a bearish move. Now we wait for today’s close, the significance of which cannot be overstated. If the floor of support in the $1306 per ounce region holds, we may see a bounce, but if not we are likely to see a return to the volume point of control which waits below in the $1280 per ounce region in the longer term. In addition with a low volume node immediately below the current price action, there is little in the way of volume in this region to provide any cushion of support, which will also accelerate this move lower.