XAU / USD remains confined to a range, forming a symmetrical triangle

• Gold extended its directionless price movements for the second consecutive session on Tuesday.
• The formation of a symmetrical triangle points to an extension of the initial downtrend.

Gold balanced between tepid gains / minor losses for the second day in a row and remained confined to a range, around the $ 1,850-60 region during the mid-European session on Tuesday.

Meanwhile, the precious metal has been oscillating between two converging trend lines for the last week or so. Price action within the range now appeared to form a symmetrical triangle, often marking a continuation of the previous trend.

Given the sharp pullback from the monthly highs, around the $ 1,960 region touched on January 6, the short-term bias remains skewed in favor of bearish traders. With that said, the direction of the next major move can only be determined after a valid breakout occurs.

Neutral technical indicators on the daily / 4-hour charts also warrant some caution for aggressive traders and before positioning for any firm short-term direction. Investors may also prefer to stay on the sidelines ahead of the FOMC’s policy decision on Wednesday.

Therefore, any decline towards the triangle support, currently near the $ 1,842 region, is more likely to attract some buying. Some follow-up selling will mark a bearish breakout and drag the XAU / USD toward last week’s lows around $ 1,800.

On the other hand, the upper bound of the mentioned triangle, around 1.865, could act as a strong immediate resistance. This is followed by the $ 1,872 supply zone, above which a short covering attack could bring the XAU / USD closer to $ 1,900.

1 hour chart