Gold (XAU/USD) has been trading in a symmetric triangle seen in the 4H chart.
This triangle reflects consolidation/congestion after a couple of bearish swings from 1392 (2014-high) to 1268.50. The clustering of the moving averages (200,100,50) also reflect a market without direction in this time-frame.
Yesterday’s FOMC meeting minutes softened the USD, and gold bounced off the triangle support.
As we get into the 5/21 US session, the key event risk is a geopolitical one – Ukraine crisis, where tension and violence remains elevated, and an election is pending for May 25. Risk aversion often has a bullish effect on gold.
At 1300, gold is just below triangle resistance. A break above 1310 might be a clear indication of a breakout, which opens up 1331. If the market can then stay north of 1300 on a subsequent pullback, there would be increased upside risk towards the 1392, 2014-high.
However, failure to break above 1331, with a return below 1300 keeps the market sideways-bearish, putting focus first back to the 1268.50 low. A break below that has
1) a support/resistance pivot area at 1220,
2) the 1200 psychological level,
3) and the 2014-low at 1183 in sight.
A false breakout scenario would be as follows: Price breaks 1268, but finds support around 1260 around the 61.8% retracement. Then price pops up above 1300.
Earlier Today: AUD/USD Trading Off Key Support Near 0.92
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