The uptrend in the gold market has changed to a downtrend relative to the US dollar.
Gold (XAUUSD) came out of the growing channel and formed a downward channel. Recent impulses of the price formed a new Lower Low, and Lower High. However, the last week the movement in the gold market has stopped. What’s next?
On the daily gold chart above, we see the last impulse down a-b, which formed the last Low at a value of 1459 (point b). Further, for more than two weeks, gold is trading inside this impulse in the range of 1535 – 1459.
Such consolidation led to the formation of a technical triangle, and even two. One is long-term, you see it on the daily chart and it is highlighted in bright pink.
The second triangle formed on the basis of a bearish daily bar. In the upper chart, a yellow arrow indicates this candle. This bar has formed short-term support and resistance for gold at 1473-1503. They are highlighted by short horizontal red and green lines.
After this candlestick we see 6 inside bars. And a short-term technical triangle.
On the 4-hour chart above, the short-term triangle is highlighted in yellow.
Let’s pay attention to the MACD indicator at 4 o’clock timeframe. The MACD line began to move horizontally at zero. And the trend lines on the indicator also form a triangle.
The technical analysis of gold tells us about the extremely high degree of consolidation of the XAUUSD instrument. And from each consolidation, there is usually a very volatile exit, which provides good trading opportunities for traders.
In the coming days, we are waiting for an increase in volatility on gold. On both sides of the consolidation range, stops accumulated at values of 1473-1503. Buyers and sellers of the instrument will fight for them.
Additionally, pay attention to the following factors. Currently, we see a fall in the US dollar on Forex, but gold is not growing against this background. We also see a risk appetite in the market, including in connection with hopes for a Brexit deal. But gold, as a safe asset, does not fall against this background.
So we need to more closely monitor technical factors, not fundamental ones. Who will be stronger – buyers or sellers of gold ??? We will find out in the coming days.
And do not forget, the trend in gold has changed to a downtrend, so the more likely direction of gold movement is a decrease in its price.
Be prudent, observe risk management and trade in a plus.