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GOLD TALKING POINTS
XAU/USD TECHNICAL BACKDROP
Gold got a boost in early trade after yesterday’s rout as the dollar weakened during the European session. Price action has been largely flat since early May, with consolidation in various technical patterns.
TECHNICAL ANALYSIS
GOLD PRICE WEEKLY CHART
The long-term weekly chart shows that this week’s candle is approaching a key turning point around trendline support (black) that has held gold prices since mid-June 2019. A break below could trigger a sell-off and coincide with a breakout of the 100-day SMA (yellow).
The daily chart of spot gold shows prices hovering around a key inflection point at $1,800.00, in line with a long-term pattern. For now, the breakout from these points continues down to the subsequent support area.
Gold Award Day Card
Chart created by Warren Venketas at IG
Zooming in on the short-term daily chart, we can see that the symmetrical triangle (black) is still in play, while the price continues to move within a bear flag (blue) chart pattern. Traditionally, a symmetrical triangle breakout can be up or down, but with the bear flag coming, our bias is sloping down. The bear flag depicts a continuation pattern that supports the previous short-term trend (bearish). I will be looking for a confirmed break below flag support, but more importantly, trendline support and the psychological $1800 level. Having said that, the current indecision in the market is highlighted by the weekly and daily Relative Strength Index (RSI) hovering around the 50 mark, neither bullish nor bearish. Based on fundamental catalysts, such a breakout could happen in the coming days/weeks, but as we approach the apex of the triangle.
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