Recall the golden triangle we were previously observing?
It appears that the precious metal is prepared for another support test!
XAU/USD is remains trapped inside a descending triangle formation on an hourly time period, with its lower highs and support located around $1,940.
On the most recent test of support, it was one terrible fakeout!
Currently, gold is retreating from the top inside its consolidation chart pattern.
Will there be a failure of support this time?
While Stochastic is moving higher from the oversold area to indicate an uptick in bullish pressure, technical indicators are sending conflicting messages.
If so, there is a significant likelihood that the descending triangle's bottom will act as a floor or that the resistance of the formation at $1,960 will be broken by XAU/USD.
If that does place, the precious metal might rally to a height at least equal to the pattern on the chart!
Although there are bearish signals present, the 100 SMA is below the 200 SMA, suggesting that the selloff may continue for the time being.
Additionally, price is attempting to fall below the 100 SMA dynamic inflection point, suggesting that this could act as a resistance level on the upside during rallies. If there is continued selling pressure, gold may possibly fall below support.
Although the most recent round of Chinese GDP downgrades is putting pressure on riskier holdings, risk sentiment appears to be in favor of further advances for this safe-haven asset.
Just be sure to pay attention to this week's top-tier catalysts to see whether or not there will be a change in attitude!
