Remember that gold triangle we had been watching a while back?
Well, it looks like the precious metal is ready for another test of support!
On its hourly time frame, XAU/USD is still stuck inside a descending triangle formation with its lower highs and support around $1,940.
Gold (XAU/USD): 1-hour
Gold (XAU/USD) 1-hour Chart by TV
That was one nasty fakeout on the latest test of support!
Now gold is back inside its consolidation chart pattern and is once again retreating from the top.
Will we see a breakdown from support this time?
Technical indicators are giving mixed signals, as Stochastic is pulling higher from the oversold region to suggest a pickup in bullish pressure.In that case, there’s a good chance that the descending triangle bottom could hold as a floor or that XAU/USD might even bust through the formation’s resistance around $1,960.
If that happens, the precious metal might be in for a rally that’s at least the same height as the chart pattern!
However, the 100 SMA is below the 200 SMA to reflect the presence of bearish vibes, so the selloff might carry on for now.
Price is also trying to close below the 100 SMA dynamic inflection point, which means that this could hold as an upside barrier during rallies. If selling pressure persists, gold might even tumble below support.
Risk sentiment seems to be in favor of more gains for this safe-haven asset, though, as the latest batch of Chinese GDP downgrades are weighing on riskier holdings.
Just make sure you keep an eye out for this week’s top-tier catalysts to gauge if we’ll see a shift in sentiment!