Gold prices have been rising recently but are currently holding at a key resistance area.
Will the channel resistance hold and force the precious metal to retreat?
Better keep your eyes open for a possible correction to these levels!
Gold (XAU/USD) 4 hours Chart by TradingView
Speculation of monetary easing has returned to haunt the US dollar, as negative surprises in inflation and consumer spending data have revived hopes of a September rate cut.
As a hedge against inflation and dollar movements, gold has taken advantage of this market shift, enough to set new record highs so far this year.
Can he handle the climb, though?
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on gold and the US dollar yet, it’s time to take a look at the economic calendar and stay up to date with the daily fundamental news!
The rally has reached a ceiling at the top of a new ascending channel that has recently formed and can be seen on the 4-hour time frame, so profit-taking could trigger a pullback to nearby support areas.
The Fibonacci retracement tool shows that the 50% level corresponds to the middle channel area of interest and the pivot point ($2,395.20) near a key psychological mark. A larger correction could reach the 61.8% Fibonacci level closer to S1 ($2,365.40) and the dynamic inflection point of the 100 simple moving average.
The 100 SMA has crossed above the 200 SMA indicating that the path of least resistance is to the upside or that the uptrend is likely to resume rather than reverse.
If any of the Fibonacci levels are enough to control losses, look for a continuation of the rise to the high of R2 ($2,478.11) and the top of the channel.
It’s best to keep tabs on This week’s collection of top-notch motivators To gauge the direction of the US dollar and risk sentiment in general as well!
