Gold has just broken through the consolidation zone, but the question now is whether this breakout is legitimate or an illusion in the making? Where could the market move next either way?
Take a look at these nearby inflection points.
Gold (XAU/USD) 4-Hour Frame Chart by TradingView
Watch out, gold bugs!
The XAU/USD pair is hovering around the strong area of interest around $2,350 again, as this level previously served as resistance and then remained as support before another breakdown.
Could he serve as a ceiling this time?
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven't done your financial homework on gold and the US dollar yet, it's time to check the economic calendar and stay up to date with daily fundamental news!
Volatile market sentiment and Fed rate expectations have led to gold jumping back and forth at this simple psychological mark, which now happens to be extended by the 50% to 61.8% Fibonacci levels.
Moreover, this zone also coincides with a descending trend line connecting the highest price levels of the commodity since mid-May, as well as R1 ($2,353.63) and the dynamic resistance of the 200 SMA.
The 100 SMA is below the 200 SMA to indicate that resistance is more likely to hold than break, which could take gold back down to the swing low at $2285 or to the next downside targets at S1 ($2266.82) then S2 ($2245.84).
Do you see any factors in the market that could lead to a weaker dollar and a gold rush soon?
