Gold Technical Analysis: Trapped in a contracting triangle
Gold's 12-day-long consolidation near $1,300 has taken the shape of a contracting triangle, the 4-hour chart shows.
The key moving averages (MAs) - 50, 100, and 200 - are trending north and are located one above the other, indicating the path of least resistance is on the higher side.
Therefore, the risks of a contracting triangle breakout are high. Moreover, a breakout, if confirmed, could yield a rally to $1,307 (March low).
On the daily chart, a golden crossover (a bullish cross between the 50- and 200-day MA) is almost confirmed.
While textbooks refer to it as a bullish pattern, in reality, the crossover represents short-term overbought conditions. This is because, it takes a great amount of effort on the part of the bulls to push the 50-day MA above the 200-day MA. Put simply, a major part of the rally has already played out by the time the crossover is confirmed.
Consequently, golden crossover confirmation is often followed by a pullback.
Gold, therefore, could see a downside break of the contracting triangle or the bullish breakout, if confirmed, could end up trapping the bulls on the wrong side of the market.
Today Last Price: 1292.7
Today Daily change: 1.0e+2 pips
Today Daily change %: 0.0813%
Today Daily Open: 1291.65
Previous Daily SMA20: 1276.54
Previous Daily SMA50: 1246.1
Previous Daily SMA100: 1229.55
Previous Daily SMA200: 1228.99
Previous Daily High: 1295.9
Previous Daily Low: 1287.7
Previous Weekly High: 1297.15
Previous Weekly Low: 1279.35
Previous Monthly High: 1284.7
Previous Monthly Low: 1221.39
Previous Daily Fibonacci 38.2%: 1292.77
Previous Daily Fibonacci 61.8%: 1290.83
Previous Daily Pivot Point S1: 1287.6
Previous Daily Pivot Point S2: 1283.55
Previous Daily Pivot Point S3: 1279.4
Previous Daily Pivot Point R1: 1295.8
Previous Daily Pivot Point R2: 1299.95
Previous Daily Pivot Point R3: 1304