Gold – Triangle Pattern Broken Down; 1268.50 in Focus

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Gold - Triangle Pattern Broken Down; 1268.50 in Focus

Gold has been consolidating in a triangle for over a month now as you can see in the 4H chart.

Gold 4H Chart
gold 5/27/2014

The moving averages clustered, reflecting a directionless market. As the 5/27 European session got underway, traders pushed down gold price from around 1295 to about 1283 by 7:00AM ET.

As we get started with the US session, traders will be seeing a breakdown of the triangle, which opens up the 1274 then 1268.50 support pivots in the very short-term.

Gold Daily
gold daily chart 5/27

The daily chart shows that the market has been bearish prior to the formation of the triangle pattern. The breakdown can extend this bearish trend below the triangle low of 1268.50, towards the 1261 level, 61.8% retracement.

Further downside risk can be confirmed if a subsequent pullback fails to push above 1300. In the daily chart, you can see that if price stays south of 1300, it will keep the moving averages above, which is a bearish sign.

A break above 1300 however keeps away the bearish outlook, and puts the focus on the triangle high around 1330.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
Earlier: GBP/JPY in a Bullish Continuation Breakout;172.74 in Sight

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.