Gold opened with a bullish gap on the first day of a new trading week, albeit lacked any strong follow-through and remained below three-week tops touched on Friday. XAU/USD bulls now await ascending triangle breakout, FXStreet’s Haresh Menghani reports.
“Market participants now look forward to the US ISM Manufacturing PMI for some trading impetus. The key focus, however, will remain on the broader market risk sentiment and the US stimulus headlines.”
“The recent recovery from the vicinity of the $1800 mark has been along upward-sloping trend-line support. This, along with a strong horizontal resistance near the $1875-76 region, constitutes the formation of an ascending triangle on hourly charts. Ascending triangles have a bullish bias and are typically seen as a continuation pattern, though sometimes mark a reversal.”
“A sustained strength beyond the triangle resistance will suggest that the commodity has bottomed out in the near-term and set the stage for a further near-term appreciating move. Bulls might then aim to reclaim the $1900 mark before pushing the XAU/USD further towards the $1922-24 supply zone.”
“Any meaningful slide might continue to attract some buying near the triangle support, currently near the $1842 region. Failure to defend the mentioned support level will negate the constructive outlook and prompt some technical selling. The precious metal might then accelerate the fall further towards intermediate support near the $1830 region before eventually sliding back to challenge the $1800 round-figure mark.”