Gold (XAU/USD) reversal from the $3,400 area has been contained at a strong support area between $3,335 and $3,345, where the pair was contained on August 4 and 5, which is also coincident with the 50% Fibonacci retracement of the early August rally.
The pair is trading sideways without a clear bias on Tuesday’s European session, as the US Dollar Index consolidates previous gains with all eyes on the US CPI release, due later today. A more cautious market sentiment on Tuesday is keeping the precious metal from dropping further.
Technical analysis: Gold has reached the wedge’s target
XAU/USD confirmed a trend shift on early Monday’s trading after breaching the bottom of the ending wedge, at $3,390. The pair featured an impulsive reversal to reach the broken wedge’s measured target, at $3,345, and is consolidating on Tuesday, awaiting a fundamental trigger to set the US Dollar’s near-term direction.
Technical indicators remain pointing lower, and a confirmation below the mentioned $3,335 level would bring the July 29 low and July 31 highs, at the $3,305-$3,315 area back to the bears’ focus, before the August 1 low, at $3,282.
To the upside, immediate resistance is at the August 8 lows at $3,380 ahead of the $3,400-$3,410 area, where the August 7 and 10 highs meet the reverse trendline. Above here, the bearish view will be cancelled with the late July highs, at $3,440 coming into view.
Source: Fxstreet
