Here’s one for the gold bugs out there!
The precious metal is back in consolidation mode, and it looks like a breakout is due soon.
On the hourly time frame below, you can see that XAU/USD formed lower highs and found support around $1,940 to create a descending triangle pattern.
Gold (XAU/USD) 1-hour Chart by TV
Price is currently testing the triangle support once more, still deciding whether to make another bounce to the resistance or go for a break lower.
Note that this floor has been holding for more than a couple of weeks already, so gold bulls might be ready to charge right here.
Technical indicators are giving mixed signals, though.
The 100 SMA is below the 200 SMA to indicate that support is more likely to break than to hold, possibly sending gold lower by the same height as the triangle formation.
On the other hand, Stochastic is already dipping into the oversold region to reflect exhaustion among sellers. Turning higher would suggest that bullish momentum might return and take XAU/USD back to the $1,970 triangle top.
A potential gold rally could also hit a ceiling at the moving averages’ dynamic resistance levels around $1,950-1,960.
Don’t forget that the precious metal is coming off a double top breakdown from a while back, so there could be long-term bearish vibes in play!
Comments are closed.