Gold might need to take a breather from its long-term climb, as the precious metal formed a sketchy head and shoulders pattern on its 4-hour chart.
Price looks ready to test its neckline support, which is right around a longer-term ascending trend line.
Will we see a breakdown soon?
Gold (XAU/USD): 4-hour
Gold (XAU/USD) 4-hour Chart Faster with TradingView
This safe-haven asset has been cruising higher since February, propped up mostly by geopolitical tensions and global economic uncertainty.
However, it appears to be struggling to sustain its rally past the latest highs near $5,400 and is flashing trend reversal signals.
Are we about to see another gold selloff next?
XAU/USD has retreated from the area of interest around the pivot point ($5,195.81) and the $5,200 major psychological level, taking it down to the next support zone spanned by $5,000-5,100 and the dynamic support at the moving averages.Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on gold and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
A break below this neckline could mark the start of a downtrend, possibly dragging gold to the bearish targets at S1 ($4,971.96) then S2 ($4,772.42).
Still, keep your eyes peeled for reversal candlesticks suggesting a bounce at nearby support regions, as a continuation of the uptrend could spur another test of the record highs or the creation of new ones.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Promoted: The Analysis & Strategy are only half the Battle; Your Mindset is the Rest.
Today’s chart art zooms in on gold’s potential reversal. But as any pro will tell you, even the cleanest trend-following setup can fall apart if the trader doesn’t stay disciplined when price starts testing the level.
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Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
