- Gold to resume the downtrend at the opening on Monday; triangle breakdown could extend to 1,750.
- Consolidation is likely if support above 1,900 remains intact.
Gold price closed the trading on Friday at $1,940.38 per ounce. The precious metal’s price action has since August 6, narrowed under a descending trendline. Apart from the dip to 1,862 on August 12, XAU/USD has established formidable support above 1,900. Subsequently, the price is trading within the apex of a descending triangle. If the ongoing rejection is not stopped at 1,900, there is a big chance that the breakdown will extend to support at 1,750.
XAU/USD 4-hour chart
The above bearish picture will be confirmed if the price drops below the 50 Simple Moving Average and the 100 SMA. Moreover, the Relative Strength Index (RSI) downward movement suggests that sellers have the upper hand. Retreat under the midline would cement the influence sellers have over the price at the opening on Monday.
However, the daily timeframe shows gold holding above the 50-day SMA. This moving average has been indicative of gold price continuing uptrend in the past. Therefore, if the price keeps above this moving average, there is a chance that XAU/USD will resume the uptrend, invalidating the bearish picture altogether.
XAU/USD daily chart
It is also essential to consider the possibility of consolidation taking precedence, mostly if support at 1,900 remains intact. The RSI in the daily range puts emphasis sideways trading taking over in the coming week.