I’m seeing a couple of classic chart patterns on the 4-hour time frame of gold.
Do you think the precious metal is in for a breakout? And which way will it go?
Take a look at these nearby inflection points I’m watching!
Gold (XAU/USD): 4-hour
Gold (XAU/USD) 4-hour Chart by TradingView
Gold has formed lower highs and found support around the $2,300 mark, creating a descending trend line that’s been holding for a couple of months already.
Price is back to testing the triangle resistance and could be ready for another bounce back to the bottom, as the moving averages suggest that bearish pressure is in play.
Flip-flopping market sentiment and shifting Fed policy expectations appear to be keeping this precious metal and the U.S. dollar in indecision mode, which means that investors are probably waiting on a big catalyst to spur direction.
Will the upcoming release of the June FOMC minutes and NFP report trigger a directional move?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on gold and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!Expectations are for the Fed to reinforce their hawkish outlook, which supports their decision to reduce their projected rate cuts from three down to one this year. However, the June jobs report is slated to show a slower pace of hiring that could revive additional easing expectations.
In any case, stay on your toes for a potential dip back to the triangle bottom near S1 ($2,300.35) if dollar strength picks up and perhaps even a break lower to the next bearish targets if momentum is sustained.
Looking further back at the 4-hour chart reveals a head and shoulders reversal pattern that could be indicative of a longer-term drop in gold prices, as the neckline coincides with the triangle support.
On the other hand, look out for a possible XAU/USD rally that’s the same height as the descending triangle pattern in the event of a bullish break above R1 ($2,346.41) and the 200 SMA dynamic inflection point.
Sustained upside momentum could lift gold up to the May highs close to R5 ($2,445.28) if we see a broad-based decline for the U.S. dollar right around the top-tier events.
Which way do you think gold could go?