XAU/USD 1H Chart: Rectangle

Source: Dukascopy Bank SA
© Dukascopy Bank SA
Considering that a rectangle is a continuation pattern and before the consolidation started the trend had been bullish, the base scenario is a break-out through 1,166. In this case the target will be a combination of the daily R2 and weekly R1 at 1,182. Beyond this lies the June high and weekly R2 at 1,206.
On the other hand, if support at the mark of 1,151 fails to underpin the price and allows the exchange rate to fall, there is likely to be a sell-off through the weekly pivot point down to 1,132 dollars, the current location of the 200-hour SMA. The sentiment among the SWFX traders is only slightly bullish: 57% of positions are long and 43% are short.
© Dukascopy Bank SA
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