- Gold rose for the third straight session on Wednesday.
- A move above a symmetrical triangle sets the stage for higher gains.
- Buying on the dips now should help limit the drop near $ 1,900.
The gold It built on the previous day’s modest bounce from a two-week rising trend line support and rose to more than one-week highs on Wednesday. The bulls may now be looking to take advantage of momentum above a downtrend line resistance, which extends from the highs touched on August 18.
The combination of trend lines formed the formation of a symmetrical triangle on the short-term charts, pointing to indecision about the short-term trajectory of gold. However, the fact that the XAU / USD has managed to break through the resistance of the triangle, the bias now seems tilted in favor of bullish traders.
Meanwhile, the technical indicators on the daily chart have only just begun to move into positive territory and add credibility to the constructive outlook. Therefore, a further move towards the monthly swing highs, around the $ 1,933 region, now seems like a clear possibility. Momentum could extend further towards the $ 1,961-63 supply zone.
On the other hand, the triangle resistance breakout point, around the $ 1,918-17 region, now appears to act as immediate support and is closely followed by the $ 1,908 level. Any subsequent decline could now be seen as an opportunity to initiate new bullish positions. This, in turn, should help limit the decline near the $ 1,900 level.
4 hour chart
Credits: Forex Street
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