Gold (XAU/USD) – Triangle Breakout Alert

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Gold (XAU/USD) - Triangle Breakout Alert

Gold price has been consolidating in a triangle since falling from 1345.28 to 1292.20.

The 4H chart shows price action swinging between the converging trendlines from last week, as well as trading between the  200-, 100-, and 50- period simple moving averages in the 4H chart. This all reflects indecision.

Gold 4H Chart 7/24
gold 4h chart 7/23

(click to enlarge)

Here are some technical signals from the 4H chart as we get into the 7/24 session:

1) As we get started in the 7/24 session, price looks like it is drifting below the triangle support as well as the 200-period SMA.

2) The RSI has held below 60 and reflects maintenance of the bearish momentum established when price fell from 1345.28 to 1292.20. As it travels below 40, it reflects re-emergence of the bearish momentum.

The near-term test is the 1300 psychological level, but the technical signs favor a downside risk toward 1292.20 and lower.

When dealing with the bearish scenario beyond 1292.20, we need to consider that the mode seen in the daily chart has been sideways in 2014. It actually looks like price is forming a triangle.

Gold (XAU/USD) Daily Chart 7/23
gold 7/23 daily chart

(click to enlarge)

The bearish outlook should thus be limited to the common support/resistance pivot area around 1274, which is where an ABC, swing projection would target. IF this bearish scenario does materialize, be prepared for buyers around the triangle support.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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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.