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Gold is getting closer to consolidation

Gold is getting closer to consolidation

created Marcin Kiepas14 May 2020

Gold it has been in consolidation for a month just below the 7th summer peak (USD 1747,14) set in April, and in the last two weeks this consolidation has narrowed even further to around USD 1700.

Gold with a chance of breaking out

In the H4 chart, the last fluctuations can be closed by two lines drawn down the holes and the tops, respectively, forming the flag formation. Her narrowing arms mean that there is less and less space for free swinging. For traffic that will not generate any signals. Its upper limit, which is currently being tested, is at the level of 1720,50 USD. Lower at 1683,40 USD.

gold analysis

XAU / USD chart, D1 interval. Source: MT4 Tickmill.

The formation of the flag usually occurs as a continuation formation, so the risk of breaking out and subsequent breaking above the April maximum at USD 1747,14 is theoretically a more likely scenario. However, on the XAU / USD H4 indicators and on the charts in other time compressions (daily, weekly), there is no need to look for strong signals confirming a greater chance of breaking out from above. In practice, therefore, it may be that the side of the market that will definitely attack first, snatching gold prices from a few weeks of stagnation, this one will simply win. It is worth observing the situation on gold, waiting for its quotations to break.

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About the Author
Marcin Kiepas
Tickmill UK analyst. Financial markets analyst with 20-year experience, publishing in Polish financial media. He specializes in the foreign exchange market, Polish stock market and macroeconomic data. In his analyzes he combines technical and fundamental analysis. Looking for medium-term trends, examining the impact of macroeconomic data, central banks and geopolitical events on the financial markets.

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