The price of gold dropped briefly after its strong rally. Technically, a temporary retreat was natural. XAU/USD could test and retest the immediate support levels before trying to resume its growth.
The price action developed a bullish pattern, but we still need confirmation before taking action. Fundamentally, the RBA Monetary Policy Meeting Minutes and the Candian retail sales data could bring some action in Gold. Still, the UK and the Canadian inflation data could really shake the markets on Wednesday.
XAU/USD Flag Formation!
As you can see on the H1 chart, XAU/USD developed a down-channel pattern after finding resistance at the 1,857 level. Technically, the price of gold failed to stabilize below the descending pitchfork's lower median line (lml), signaling that the downside movement ended.
Now, it has jumped above the median line (ml). The price was almost to reach and retest it but 1,836 stopped the sell-off. In the short term, the metal is trapped between the 1,836 and 1,844 levels.
XAU/USD Forecast!
Staying above the 1,836 and making a valid breakout above the channel's resistance and through the 1,844 could activate a new swing higher and could bring new long opportunities with a first upside target at the descending pitchfork's upper median line (uml).
