Gold prices are heading sideways in a symmetrical triangle formation, hovering near the short-term simple moving averages (SMAs) and within the squeezed Bollinger bands. The market could remain in consolidation if the RSI keeps moving around 50 and the MACD stays around the zero line with weak momentum in the 4-hour chart.
An extension to the upside and above the descending line of the triangle, which overlaps with the upper Bollinger band could meet the 1,722 area. Further up, resistance could run towards the 1,739 barrier ahead of the seven-and-a-half-year peak of 1,746.95.
On the other hand, if the pair weakens, the 20-period SMA which stands around 1,696 could provide immediate support ahead of the lower Bollinger band and the 23.6% Fibonacci retracement level of the up leg from 1,451 to 1,746.95 at 1,676. Below that, 1,671 and 1,661 could attract greater attention as any leg lower would worsen the market’s bearish outlook, opening the way towards the 1,638 – 1,633 area, which encapsulates the 38.2% Fibonacci.
Regarding the short-term picture, the neutral sentiment deteriorated after the bounce off the seven-and-a-half year high of 1,746.95 and only a move above this line could help to return to bullish.
