There is a falling wedge forming on the short term Gold charts as the price consolidates. This could lead to a bullish break out that will target the top of the bearish channel.
Gold futures have been on a bearish run lately as the US economy looks more robust and the US Federal Reserve contemplates the timing of interest rate rises. The US dollar has been rising on the weakness in the euro and the pound and this is also having an effect on gold. The result is a falling wedge that is actually a bullish pattern, however an upside breakout is required first.
As the price is squeezed, with any luck we will see a bullish breakout. There may be a small pull back on the first breakout which tests the trend line. If this holds as dynamic support then we could see a much larger movement towards the top of the bearish channel as noted in the H4 chart below.
It would pay to keep an eye on the US Unemployment claims as labour statistics have a big impact on the gold markets. US retail sales on Friday will also be watched by Gold traders as they give an indication of the state of the US economy.
The RSI appears to be shifting towards the bullish side. It has come back from very oversold, with each progressive low higher than the last. If we do see a bullish breakout, look for resistance at 1257.67, 1271.75 and 1283.33 to potentially hold up the price movement or act as exit points, and of course look for the upper level of the channel to act as dynamic resistance. Support levels can be found at 1244.00 and 1240.48, with both the wedge and the channel acting as dynamic support.
Gold futures are forming a falling wedge on the hourly chart which may lead to a bullish breakout and reversal of the recent downward trend. It could then find resistance at the top of a bearish channel.