Gold Price Analysis: XAU/USD breaks through a symmetrical triangle resistance

Gold built on the previous day's modest bounce from a two-week-old ascending trend-line support and climbed to over one-week tops on Wednesday. Bulls  |  21/10/2020 13:38
  • Gold edged higher for the third consecutive session on Wednesday.
  • A move beyond a symmetrical triangle sets the stage for further gains.
  • Dip-buying should now help limit the downside near the $1900 mark.

Gold built on the previous day's modest bounce from a two-week-old ascending trend-line support and climbed to over one-week tops on Wednesday. Bulls might now be looking to build on the momentum beyond a descending trend-line resistance, extending from highs touched on August 18.

The combination of trend-lines constituted the formation of a symmetrical triangle on short-term charts, pointing to indecision over the commodity's near-term trajectory. However, the fact that the XAU/USD has managed to break through the triangle resistance, the bias now seems tilted in favour of bullish traders.

Meanwhile, technical indicators on the daily chart have just started moving into positive territory and add credence to the constructive outlook. Hence, a subsequent move back towards monthly swing highs, around the $1933 region, now looks a distinct possibility. The momentum could further get extended towards the $1961-63 supply zone.

On the flip side, the triangle resistance breakpoint, around the $1918-17 region, now seems to act as immediate support and is closely followed by the $1908 level. Any subsequent slide might now be seen as an opportunity to initiate fresh bullish positions. This, in turn, should help limit the downside near the $1900 round-figure mark.

XAU/USD 4-hourly chart

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Technical levels to watch

 

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