Is gold about to retreat from its highs soon?
I see a reversal pattern that looks ready to run on the 4 hour chart!
For now, the precious metal is still hovering above the neckline support. If it collapses, how low do you think XAU/USD could go?
Gold (XAU/USD) 4 hours Planned by TV
After two failed attempts to break through the $2040 resistance area, gold returned lower to test the double neckline at $1960.
A break below this support area could send the precious metal lower to the same height as the chart formation, or close to $80.
The moving averages seem to favor the downside, as the gap between the indicators has narrowed enough to indicate a possible bearish cross. At the same time, XAU/USD is trading below both SMAs, so it could hold as dynamic resistance levels.
Stochastic has some room to head lower before it reverses oversold conditions or exhaustion among the sellers.
However, if the oscillator starts to rally, gold could continue to falter and allow a bounce back to the near $2000 area of interest.
I will be watching for updates on the US Debt Ceiling Negotiations, as they seem to be influencing the dollar price action and overall market sentiment lately.
Any hints of a resolution could convince dollar bulls while more signs of discord could highlight gold’s safe-haven appeal.