XAU/USD forms junior channel down

During the early hours of new trading session the yellow metal continued to lose value against the buck in a junior descending channel.

Basically, the consolidation period might last until the exchange rate will hit the support line of a four-week long ascending channel.

A deep plunge below that barrier seems unlikely due to additional support provided by the rising 200-hour SMA as well as the 50% Fibonacci retracement level located at 1,297.00.

So, unless the buck gains a momentum from some fundamental event, such as tomorrow’s employment data release, the bullion is likely to test the 1,320.00 level one more time. An allocation of pending orders as well as some technical indicators supports this assumption.