XAU/USD 4H Chart: Channel Down

Source: Dukascopy Bank SA
© Dukascopy Bank SA
There is a potential bearish channel emerging on the four-hour chart of XAU/USD. For the past 230 bars the gold has been generally depreciating, but at the same time it has been respecting two parallel falling trend-lines. This implies that the currency pair will not be able to advance beyond 1,315.80, which, apart from being the upper boundary of the pattern, is also the May 5 high. Accordingly, the instrument is expected to be sold off until the price reaches the lower boundary of the pattern, namely the level of 1,255. However, the current sentiment of the market is strongly bullish—69% of traders are holding long positions.

© Dukascopy Bank SA
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