Gold (XAU/USD) price consolidated between roughly 1283 and 1272. since August 20. After a few sessions of tight consolidation, price popped up and formed a mini-price bottom. After a rally to 1290, price pulled back. Note that the 4H RSI reading was held below 60, which shows that the prevailing bearish momentum is still intact.
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Now price is back around 1280, testing the mini price bottom. If price can hold north of 1280, there should still be some further upside in the short-term toward 1300, up to 1305. 1300 is a stick, psychological level, reinforced by the 200-period SMA in the 4H chart. 1305 is the support from a previous price top. This previously broken support, could be a key resistance if the market is bearish.
As price rallies and potentially confirms the mini-consolidation, mini-price bottom, we should note that the rally is also showing respect to the triangle support seen in the daily chart.
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In the daily chart you can see that
1) Price did not break below the triangle.
2) The RSI did not fall to 30.
These are signs that bears are weak in this market. A short-term bullish outlook is very possible. In this scenario, we should indeed monitor the 1300-1305 area, which happens to be the central area of the triangle and where the 100- and 50-day SMAs reside. A break above 1305 should then shift the mode from neutral-bearish to neutral-bullish, with focus on the triangle resistance. After failing to break triangle support, will gold be able to break triangle resistance?
To the downside, a break below 1270 should open up 1240, then the low on the year around 1183. A break above triangle resistance, which is probably around 1320, should open up the 1345 July high, then the 1388.50 high on the year.
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