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Gold Holds Resistance as Bulls Persist, but Can They Break Through?

Gold Holds Resistance as Bulls Persist, but Can They Break Through?

2019-11-04 19:39:00
James Stanley, Strategist
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Gold Price Talking Points:

  • Gold prices are currently testing a zone of resistance that’s held the highs throughout Q4 trade.
  • Last week’s FOMC rate decision pushed the US Dollar back down to two-month-lows. And while Gold prices showed a flare of strength, they remain inside of recent swing-highs.
  • DailyFX Forecasts are published on a variety of markets such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Gold Goes Back to Resistance

Digestion in Gold prices has continued through a really big week of drivers; and even though the US Dollar remains relatively weak, clinging to support around two-month-lows, Gold prices have yet to leave this recent round of congestion behind. After the FOMC rate decision last week, US Dollar weakness continued to show into last week’s close. And while this did help to buoy Gold prices, price action remained subdued below the 1517 swing high that was set in the prior week; keeping the bigger-picture theme of Gold strength at bay, at least for now.

Gold Price: Eight-Hour Chart

gold price eight hour chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Bullish Trend

Gold price action was in a strong breakout earlier this year and that theme of Gold strength extends all the way back into the latter-half of 2018. That breakout went on pause from February-May as a falling wedge formation had built; and a similar backdrop has developed over the past couple of months as a bull flag formation formed. Last week’s topside push in Gold has seen price action travel outside of the bearish channel making up that bull flag.

Gold Daily Price Chart

gold daily price chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Near-Term

On a shorter-term basis, Gold prices have built into a range formation as prices have started to tip-toe outside of that bull flag formation. Resistance from the recent range is currently under fire and this can help to set the stage for bullish approaches, with buyers looking for range breakouts from resistance or, alternatively, looking for revisits of support to allow for topside trend strategies.

Gold Two-Hour Price Chart

gold two hour price chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Breakout Potential

The big takeaway from last week’s FOMC rate decision was the Fed highlighting the fact that they’re not expecting to raise rates until a ‘really significant’ increase in inflation. And while this isn’t quite as dovish as what Chair Powell was saying in early-June just before the bullish breakout in Gold caught another push, it does remove one of the hindrance or threats to higher prices which would be the potential for rate hikes from the Fed.

Since that rate decision, buyers have remained fairly-persistent. On the two-hour chart below, the FOMC-move is highlighted in Green and notice how since then, pullbacks have remained relatively minor with buyers jumping in to arrest recent declines. This keeps the door open for short-term bullish breakout potential.

The current swing-high plots around 1516, and above that is the October swing-high around 1520. Just beyond that level is the 1527 Fibonacci level, after which 1535 becomes of interest, currently functioning as the two-month high. If that level gets taken-out, the stage is set for another re-test of the 1550 level that’s proven so difficult for buyers to breakthrough so far.

Gold Four-Hour Price Chart

gold four hour price chart

Chart prepared by James Stanley; Gold on Tradingview

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

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