XAU/USD Gold Weekly Technical Analysis 10.08.2020
Gold is often used as an inflation hedge. Theoretically, as we have stated before, as Gold rises, the U.S. Dollar should fall. This is not always the case but as we will see in our technical analysis below, the weekly price action is giving us a great deal indications of what to expect from Gold over the next few weeks and months.
Looking at the chart we see that Gold had a breakout in July, which consequently coincides with the U.S. Dollar having a breakdown. We are now seeing it create what looks like a bull flag patter, as noted with the channel above. Bull flags tend to require between 10-14 periods before the prevailing trend is either a continuation or fails.
This measure means we are still a few weeks away from a decisive move in Gold. Interestingly enough, there is a major election in a couple of weeks. Therefore, we believe gold will continue to trade in this descending channel between 1900-1750 pending the resolution of the election.
The RSI is moving towards the 50 level. As it reaches this level on the weekly chart we will be looking for the reaction at that point.