Remember that golden triangle we were watching a while ago?
Well, looks like the precious metal is ready for another test of support!
On the hourly time frame, XAU/USD is still stuck inside a descending triangle formation with its lower highs and support around $1,940.
Gold (XAU/USD) 1 hour Planned by TV
That was a disgusting fake in the latest support test!
Gold is now back inside its own consolidation chart pattern and is falling back from the top.
Will we see an avalanche of support this time around?
Technical indicators are giving mixed signals, as the stochastic is rising from the oversold zone, indicating rising bullish pressure.
In this case, there is a good chance that the bottom of the descending triangle will hold as a floor or that XAU/USD may break the formation resistance around $1,960.
If that happens, the precious metal could be on its way to at least as high as the chart pattern!
However, the 100 SMA is below the 200 SMA to reflect the presence of negative feedback, so selling may continue for the time being.
The price is also trying to close below the 100 SMA a dynamic inflection point, which means this could hold as an upward barrier on the upside. If the selling pressure persists, gold could drop below the support level.
Risk sentiment seems to favor further gains for this safe-haven asset, although the latest batch of Chinese GDP cuts weighed on riskier holdings.
Just be sure to keep an eye on this week’s high-level catalysts to gauge if we see a shift in sentiment!