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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.

4-hour chart

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).

Daily chart

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.

Trend: Neutral-to-bearish

XAU/USD

Overview:
    Today Last Price: 1292.7
    Today Daily change: 1.0e+2 pips
    Today Daily change %: 0.0813%
    Today Daily Open: 1291.65
Trends:
    Previous Daily SMA20: 1276.54
    Previous Daily SMA50: 1246.1
    Previous Daily SMA100: 1229.55
    Previous Daily SMA200: 1228.99
Levels:
    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

 

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