Where Did You Gold? - XAU/USD to face stiff resistance at $1736 after double-bottom reversal
- Gold’s double-bottom reversal on the 1D chart to meet strong offers at $1736.
- The RSI stays below the midline, pointing to the limited upside.
- Risk-on mood persists amid Easter Monday trading, eyes on US ISM Services.
Gold (XAU/USD) is struggling to extend its last week’s recovery on Easter Monday, as outstanding US NFP data-induced risk-on market mood underpins the Treasury yields at the expense of the yieldless gold.
Further, stronger US data points to faster economic recovery, which boosts expectations that the Fed could hike the interest rates sooner, weighing negatively on the yellow metal.
Meanwhile, hopes of US President Joe Biden’s $2 billion infrastructure plan getting approval from Congress limit the downside in gold.
From a near-term technical perspective, gold has carved out an ascending triangle formation on the daily chart after the double-bottom reversal from $1777 levels.
Note that the price has found strong support at that level on March 8 and 31.
Gold needs a daily closing above the falling trendline resistance at $1736 to confirm an upside break from the triangle.
However, with the 14-day Relative Strength Index (RSI) still trending below the central line, XAU bulls could likely face rejection at that level.
The immediate support is then seen at the 21-daily moving average (DMA) at $1723, below which Thursday’s low of $1705 could be on the sellers’ radars.
Alternatively, if the triangle breakout occurs then the bulls will target the psychological $1750 barrier.
The next relevant hurdle then awaits at the descending 50-DMA at $1768.
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