An ascending triangle is forming
There appear to be two ways to look at the recent tight consolidation pattern: as a rectangle, or as an ascending triangle pattern developing within the rectangle. If the triangle comes into play, a sharp upward breakout above 2,532 could occur. If the integrity of the triangle holds, a breakout or failure is likely to occur within the next five days when the two borders of the pattern intersect.
After that, the 2.30 level will either be broken to the upside or the minor uptrend line at the bottom of the ascending triangle will fail to hold as support. A break below the support of the line would first result in a retest of support at the top of the symmetrical triangle pattern (in purple), with the 50-day moving average at 2,449 just below that.
Upward trend, but beware of declines
Given the uptrend seen on multiple timeframes, the upward bias remains, but the longer gold remains stable, the greater the risk of failure to rise. As mentioned above, the 50-day line is an important price indicator of trend. Gold confirmed its importance by bouncing off this line at two bottoms in July and August. Therefore, this line should hold as support in a bear market, and failure to hold is a warning sign.
Price contraction turns to expansion
The narrowing of the price range over the past month could lead to a sharp breakout from the current price range, with a high of 2,532 and a low of 2,471. A decisive rise above 2,532 would send gold towards 2,566, a 161.8% extension objective of a cautious move from the 2022 low.
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