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Technical Trade Setups: Gold, USD/CAD and S&P 500 Levels

Technical Trade Setups: Gold, USD/CAD and S&P 500 Levels

Michael Boutros, Strategist

Near-term Technical Outlook: Trade Setups on Gold, USD/CAD & SPX500

  • Updated charts on technical setups we're trackinng in Gold, USD/CAD & SPX500
  • Gold breakout targets in view
  • USD/CAD probing critical support confluence
  • S&P 500 sell-off threatens deeper correction
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An update on technical setups we've been tracking inthe Gold, the Canadian Dollar and the S&P 500. These are the targets and invalidation levels that matter heading into the close of the week.Review my latest Strategy Webinar for an in-depth breakdown of thesetechnical setups and more.

Gold Price Chart - XAU/USD 240min

Gold Price Chart - XAU/USD 240min - GLD Trade Outlook - GC Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; Gold on Tradingview

In my last Gold Price Outlook we noted that, “From at trading standpoint, look for a low ahead of 1800 this week with a close above 1829 still needed to keep the bullish bias viable in the days ahead.” XAU/USD registered a low 1805 on Tuesday before reversing higher with a breach / close above 1829 yesterday opening the topside for a larger advance. Initial support now back at 1829 with near-term bullish invalidation raised to the weekly open at 1817. Topside resistance objectives from here are unchanged at the 2021 high-week close at 1849 and pair of extensions at 1861 and 1877- both areas of interest for possible topside exhaustion IF reached.

Bottom line: A breakout of the weekly / monthly opening-range highs keeps the medium-term outlook weighted to the topside in gold. Losses should be limited to this week’s open IF price is heading higher with a breach above the median-line exposing the upper parallels. Review my latest Gold Weekly Price Outlook for a look at the longer-term XAU/USD technical trade levels.

Gold Trader Sentiment – XAU/USD Price Chart

Gold Trader Sentiment - XAU/USD Price Chart - GLD Retail Positioning - GC Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.11 (67.84% of traders are long) – typically bearishreading
  • Long positions are2.29% higher than yesterday and 3.14% higher from last week
  • Short positions are 4.83% higher than yesterday and 9.30% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Trader are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed Gold trading bias from a sentiment standpoint.

Canadian Dollar Price Chart - USD/CAD 240min

Canadian Dollar Price Chart - USD/CAD 240min - Loonie Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

In my latest Canadian Dollar Technical Price Outlook we noted to that the focus remains on a critical support pivot at 1.2432/70- we’re looking or possible price inflection off this zone over the next few days with the December decline vulnerable while above.

Bottom line: The battle lines are drawn into this confluent support zone. From a trading standpoint, this may prove to be a fade-able event but price would need to hold these lows and breach/ close above the yearly open needed to suggest a more significant reversal is underway. A close below this threshold would likely fuel another accelerated drop with such a scenario targeting the lower parallels- stay nimble on this one. Review my latest Canadian Dollar Weekly Price Outlook for a look at the longer-term Loonie technical trade levels.

S&P 500 Price Chart - SPX500 240min

S&P 500 Price Chart - SPX500 240min - SPX Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; SPX500 on Tradingview

We’ve been tacking this setup in the SPX500 since the start of the year, flagging breakout targets at the September highs at 4551 and a more critical support confluence at the 61.8% Fibonacci retracement of the September rally / December swing low / 100% extension of the monthly decline at 4481-4513 – an area of interest for a possible exhaustion low IF reached. Initial resistance now 4610 with near-term bearish invalidation now lowered to 4673.

Bottom line: Risk remains for a larger washout while within this formation and we’re looking to validate a near-term low next week. We’ll review this setup into the open on Monday morning in my Weekly Strategy Webinar.

SPX500 Trader Sentiment – US500 Price Chart

SPX500 Trader Sentiment - US500 Price Chart - SPX Retail Positioning - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long the S&P 500- the ratio stands at +1.57 (61.10% of traders are long) – typically weak bearishreading
  • Long positions are5.43% higher than yesterday and 25.13% higher from last week
  • Short positions are 4.90% lower than yesterday and 17.73% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US 500 prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger US 500-bearish contrarian trading bias from a sentiment standpoint.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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