Gold seems to be forming a fresh downtrend channel and is completing a short-term reversal pattern at the resistance.
Is the precious metal in for another wave lower?
Take a look at these inflection points I’m watching on the 4-hour time frame:
GBP/JPY 4-hour Forex Chart by TradingView
Gold has been cruising lower since mid-April, as global trade tensions appeared to be simmering while some negotiations have been bearing fruit.
The precious metal is once again testing its descending channel resistance and has formed a short-term reversal pattern right at the top.
Can XAU/USD break below its neckline soon?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your 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!
Gold is hovering around the pivot point level ($3,297.42) near the $3,300 major psychological mark, which could prove to be a tough area to break.
Look out for long red candlesticks closing below this area, possibly sending the precious metal lower by the same height as the formation or down to the next bearish targets at S1 ($3,237.84) then S2 ($3,185.98).
On the other hand, holding as support could spur another attempt to climb above the channel resistance and possibly test R1 ($3,349.27) near the previous week highs.
Sustained gains past this point could set off a reversal from the downtrend, potentially lifting gold to the next resistance zones at R2 ($3,408.85) then R3 ($3,460.71) close to the all-time highs.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
