Welcome to Extreme Investor Network, where we provide you with unique insights and analysis on the stock market, trading, and all things related to Wall Street. In today’s blog post, we’ll be discussing the tightening range that designs a symmetrical triangle pattern in gold prices.
The symmetrical triangle pattern, represented by the dark blue lines on the chart, indicates a period of contracting volatility in the gold market. As long as gold remains within the boundaries of the triangle, consolidation is expected to continue. However, once a breakout occurs – whether to the upside or downside – we can anticipate an expansion in volatility. Typically, after a period of contracting volatility, we see a clear pickup in momentum.
In addition to the symmetrical triangle pattern, we’re also observing multiple tests of resistance in the gold market. Over the past few days, resistance has been retested around the 50-day moving average line, as well as the top rising trend channel line. Recent price action has also encountered resistance around the downtrend line. These multiple levels of resistance near the recent highs indicate a bearish sentiment, suggesting a potential continuation lower for gold. However, it’s important to remain open to the possibility of a bullish reversal as well.
The key question now is whether we will see a breakout to the upside or downside. A breakdown is indicated by a drop below the lower triangle line and the recent swing low at 2,294. In this scenario, the primary downside target is 2,211 to 2,195. On the other hand, bullish momentum is expected to accelerate with a rise above 2,340 and especially above last week’s high of 2,369.
As always, it’s important to stay informed about economic events that could impact the market. Be sure to check out our economic calendar for a comprehensive look at today’s events.
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