Gold Price Analysis: Range play continues, focus on Bollinger bands
|- Gold's hourly chart shows a Bollinger band squeeze.
- The direction of the range breakout will likely set the tone for the next move in the yellow metal.
Gold's sideways churn in the range of $1,630 to $1,610 continues for the third day. With the decline in the price volatility, the Bollinger bands have narrowed.
Bollinger bands are volatility indicators placed two standard deviations above and below the price's 20-day moving average. A low-volatility period often paves the way for a big move on either side.
The focus, therefore, is on the upper and lower bands currently located at $$1,626 and $1,612, respectively. An hourly close above the upper band would imply a range breakout and open the doors to a test of recent highs above $1,640. Alternatively, a range breakdown would expose the support at $1,594.
The latter looks likely as the 4-hour chart relative strength index is reporting a bearish divergence. Also, the dollar index, which tracks the value of the US dollar against majors, is flashing green near99.38, having bounced up from 98.30 on Monday.
Hourly chart
Trend: Neutral
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.