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Gold is in the Middle of a Triangle

When you look at gold in the 4H chart, you see some bearish signs for the short-term. Even though price broke above a falling trendline, it held below the moving averages (200-, 100-, and 50-period SMAs). The 4H RSI held below 60, which shows maintenance of the bearish momentum. The general pattern of lower highs and lower lows since gold was at 1345, is still intact. 

(Gold 4h chart 7/30)

When you look at the daily chart however, you should be reminded that the market is essentially sideways in 2014. It is apparently in a triangle and price is in the middle of that triangle, hanging out with the 200-, 100-, and 50-day SMAs. This means, while the outlook is bearish in the short-term, price is relatively neutral based on 2014 price action. If price breaks the triangle support, it becomes bearish in the medium-term. Otherwise, we should respect support around 1270, where price might meet the triangle support. We should also respect the 1330 area, as that might be where price will meet the falling trendline. 

(Gold daily chart 7/30)

If the FOMC hints at a rate hike before mid-2015, or speeds up tapering, then it is hawkish, and the market might extend the current USD-strength. In this scenario, gold is likely going to challenge the triangle support.

On the other hand, if the FOMC does not do neither of these things, USD might need to consolidate. Gold might still drift lower due to short-term bearish momentum, but when the 4H RSI dips below 30, look for support, whether or not price has made a new low on the month. If the low is above 1290, there could be upside risk in the short-term toward the 1325-1330 area. If the low is below 1290, we should limit the bullish outlook to 1310. 

A dovish FOMC, which seemingly is the least likely scenario to the market, should send USD lower across the board, and push gold up toward the triangle resistance in a hurry.