Market update: gold wavers, GBP/USD forges symmetrical triangle, russell 2000 eyes breakout

[MongiIG]

Gold rebounds but faces resistance at $2,040, while GBP/USD consolidates within a symmetrical triangle. Russell 2000 encounters resistance at 2,000. Critical levels and potential trends explored in technical analyses.

 

Source: Bloomberg

 

Forex Shares Commodities GBP/USD Technical analysis Gold

 

 Written by: Diego Colman | Market Analyst, New York | Publication date: Wednesday 24 January 2024 05:19

Gold technical analysis

After falling to multi-week lows last Wednesday, gold has recovered some ground in recent days; however, the rebound appears to be losing momentum, with prices approaching trendline resistance at $2,040. To gauge the future direction, it’s vital to see how XAU/USD reacts around this ceiling, keeping in mind that a breakout could usher in a move towards $2,065. Moving up, all eyes will be on $2,080.

In case of a bearish rejection around $2,040, technical support is positioned around $2,005. The precious metal might find stability in this area during a pullback before mounting a turnaround, but should prices fall below this threshold, the bears could initiate an assault on $1,975. Additional losses from this point onward could draw attention to the 200-day simple moving average.

Gold price daily chart

 

Source: TradingView

GBP/USD technical analysis

GBP/USD has been in an uptrend since October of last year, but its upward impetus has faded in recent weeks, with cable entering a consolidation phase, as reflected by the pair’s coiling within what appears to be a symmetrical triangle.

A symmetrical triangle, composed of two converging trend lines, an ascending one connecting a sequence of higher highs, and a descending one linking a series of lower lows, is usually considered a continuation pattern once confirmed.

This setup is validated once prices breach the triangle, especially if the move is in the direction of the prevailing trend. In the case at hand, GBP/USD might rally towards 1.2775 upon successfully clearing 1.2750. With continued strength, the focus could shift to 1.2830, followed by 1.3000.

On the other hand, if consolidation resolves to the downside and prices fall below support at 1.2600, the 200-day simple moving average will serve as the next line of defense against a deeper pullback. Shifting gaze downward, all eyes will be on 1.2455.

GBP/USD daily chart

 

Source: TradingView

Russell 2000 technical analysis

Following a sharp selloff earlier this month, the Russell 2000 has rebounded recently, though it has encountered resistance near the psychological 2,000 level. The small-cap equity index's ability to surpass this hurdle remains in question, but if a decisive breakout occurs, a retest of last year’s highs near 2,075 could be around the corner. On further strength, a move towards 2,142 should not be ruled out.

On the flip side, if sellers return and regain decisive control of the market, prices could head back toward trendline support at $1,925. The Russell 2000 could bottom out around these levels during a retrenchment before staging a turnaround; however, a breakdown could intensify downward pressure, paving the way for a drop toward 1,885.

Russell 2000 daily chart

 

Source: TradingView

 

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.