XAUUSD, Calm before the Storm?

• Gold is in a triangle pattern
   

• Key levels of interest are $2346.50 and $2304.00

XAUUSD on a 4-hour chart has coiled into a pennant and is primed for a breakout.

A pennant is a short-term consolidation pattern with converging trend lines.

This pause came after experiencing an almost 4% price drop on June 7, 2024.
 

According to Thomas Bulkowski's book, "The Encyclopedia of Chart Patterns", pennants typically occur 55% to 57% of the way along a trend, suggesting the possibility of further downward movement for gold.

As of now, gold bulls (those looking to see a gold rally) are testing the upper trendline of the chart pattern. 

The shortfall within the pattern may be indicative of the near-term breakout direction.

This upward surge from the shortfall to the upper bound trendline of the pennant followed the release of weaker than expected retail sales data.

On a breakout of the triangle, gold bulls may have to overcome the trend line resistance (drawn from May 20th high at $2450.03 and tested on June 7th, 2024).

Key levels to watch for gold bulls are:

• $2346.50 – The downward sloping trend line drawn from over May 20th (1700 points)
   
• $2360.00 – A significant price level
   
• $2386.84 – The start of the “flagpole” leading into the pennant

On the other hand, gold bears may pay attention to the following interest levels.

• 2304.00 – the price around the lower band of the pennant
   
• 2275.21 – A significant price level

Caution: With the US markets closed this Wednesday 19th, choppy price action may be on the cards for today's session.