XAUUSD Falling Wedge within a Channel Down

FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
Gold has been trading within a Channel Down since the September 03 High but lately a bullish pattern has emerged, a Falling Wedge . This is typically a bullish reversal pattern as then it's completed, the price starts to rise.

The most recent Falling Wedge patterns were in mid July and late June. Both delivered a rally upon completion but currently XAUUSD resembles more the June pattern both in price terms (4H MA50 as Resistance, around -6% drop from the top) and 4H RSI (it has been on a bullish divergence as when the Falling Wedge was on Lower Lows, the RSI was on Higher Highs).

Our thesis is that if the market closes one 1D candle above 1,747 (i.e. above the Falling Wedge ), then the break-out of the pattern is confirmed and can target the 2.0 Fibonacci extension , which is currently at 1795. On a different occasion (failure to 1D close above 1747), the pattern should break to the downside targeting the 1680 Support.

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