- Gold now seems to have formed a symmetrical triangle on short-term charts.
- Neutral technical indicators warrant caution before placing directional bets.
Gold extended its sideways consolidative price moves through the early North American session and remained confined in a narrow trading band, around the $1900 mark.
Looking at the technical picture, the XAU/USD has been oscillating between two converging trend-lines over the past one month or so. The range-bound trading action constitutes the formation of a symmetrical triangle on short-term charts.
The symmetrical triangle, though could be categorized as a bearish continuation, marks indecision over the precious metal’s near-term trajectory. Moreover, neutral oscillators on 4-hourly/daily charts haven’t been supportive of any firm near-term direction.
Hence, the direction of the next major move can only be determined after a valid breakout. This, in turn, warrants some caution for aggressive traders and points to an extension of the subdued trading action amid a combination of diverging forces.
A weaker tone surrounding the US dollar might continue to lend some support to the dollar-denominated commodity. However, indications of a strong opening in the US equity markets might undermine the safe-haven XAU/USD and any attempted positive move.
In the meantime, immediate resistance is pegged near the $1917-18 region, which if cleared decisively might be seen as a fresh trigger for bullish traders. Gold might then aim to surpass the $1932 intermediate hurdle and test the $1950-55 supply zone.
Conversely, a convincing break below the triangle support, currently near the $1895 region, now seems to accelerate the fall towards the $1874-72 horizontal support. Subsequent weakness has the potential to drag the XAU/USD back towards September monthly swing lows, around the $1850-48 region.
XAU/USD 4-hourly chart
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Technical levels to watch
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