Gold forecast following breakdown from continuation pattern

  • XAUUSD
    (${instrument.percentChange}%)


The XAUUSD H4 chart shows a rising wedge pattern (parallel turquoise lines). This formation is a continuation pattern, i.e. after it resolves, it is expected to continue in the direction of the previous impulse, which was down. Technical analysis suggests that flags fly at half-mast. This phrase means we can apply a measured move to arrive at a potential pattern target.

In this case, the target is $1,730, a decline of just over 6%. However, we caution that measured moves are not "carved in stone." This shifting is because market variables are constantly in flux as new information discounts. As such, the price may or may not achieve the target.

However, we consider the pattern's breakdown as a bearish development. The stochastic is below 20, which suggests weak momentum. The longer this level or below is maintained, the more plausible the target.

The precious metal is under pressure from a rampant dollar. However, gold benefitted from the greenback's pause following an overbought condition. This has now normalised, and if the dollar finds support, it will contribute to the unwinding of the XAUUSD continuation pattern.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}