Gold has been trading a lower high and a lower low pattern for the last three days. In the past week, the precious metal has dropped slightly as the US dollar strengthened from 2-year lows. Notably, a descending trendline has continued to limit the upside movement of the precious metal.
This week’s barrier formed at $1,966 and it managed to prematurely pause the well-orchestrated mission of the yellow metal to hit highs above the $2,000 per ounce levels. The rejection that came up at $1,966 sent XAU/USD spiraling downwards towards the support located between 1,940 -1,935.
Based on the Relative Strength Index (RSI), gold is expected to continue with last week’s downtrend. If the support at $1,935 implodes, the precious metal may plunge further to test the primary support range located between 1,905 and 1,910.
The 4-hour chart shows the formation of a falling triangle pattern. Any breakout above this zone, the triangle will invalidate the above described bearish scenario. Also, the price of gold is still trading above the 50 Simple Moving Average. This moving average has functioned as working support in the past and an inflection point that has led to more upside movement previously.
Interestingly, the triangle breakout targets $2,000 per ounce in the short-term. Any further upside movement above that may extend the price of gold to reach as far as $2,100.