Gold is still stuck in its triangle pattern, but the consolidation has been getting tighter and tighter.
Is it due to bust out soon? And which way might it go?
Here are the levels I’m keeping tabs on.
Gold (XAU/USD) 4-hour Chart by TradingView
This precious metal has formed lower highs and found support around $2,015, creating a descending triangle pattern that’s been holding so far this year.
Shifting monetary policy expectations, persistent geopolitical tensions, global growth concerns and fickle risk appetite have kept this safe-haven commodity bouncing back and forth between inflection points.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on gold and market sentiment, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Gold just retreated from the triangle top and is now closing in on support, possibly gearing up for yet another bounce near S1 ($2,011.38). If the floor holds, XAU/USD could set its sights back on resistance near the pivot point level and 100 SMA dynamic inflection point.
Sustained bullish momentum might even spur a move past the triangle top and onto the next upside targets at R1 ($2,041.02) then R2 ($2,057.69). After all, an upside breakout could be followed by rally of the same height as the chart formation.
A break lower, on the other hand, could set off a drop to the next potential support at S2 ($1,998.30). Note that the 100 SMA is below the 200 SMA to suggest that the triangle bottom is more likely to break than to hold.
Stochastic is also on the move down to indicate that bearish pressure is in play, but the oscillator is also nearing the oversold region to signal exhaustion among sellers soon.
Whichever bias you end up trading, make sure to use trading plans and to execute your best risk management skills!