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  • Gold prices gain as potential systemic risks out of China's Evergrande Group roil broader markets. Meanwhile, iron ore is ticking higher after a big drop on Monday as China steps up steelmaking curbs. Get your market update from @FxWestwater here:https://t.co/l4kAWDJ2wm https://t.co/b9m5ADIqqb
  • Gold remains higher despite positive Evergrande news out of China. Meanwhile, copper bulls are pushing prices upward as the potential for a housing crisis in China ebbs. Get your market update from @FxWestwater here:https://t.co/TK3MNntBdA https://t.co/14UKjR4w6M
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sIauS https://t.co/JIT5it2HAt
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
  • The move in rates after this week’s FOMC has continued and the 10 year yield has pushed up to a fresh two-month-high. Get your market update from @JStanleyFX here:https://t.co/CRWhuZ3sxD https://t.co/svHHqN2Zz8
  • S&P 500 contending with its proverbial ‘line in the sand’ as bulls and bears battle for directional control. How we close/trade around the 50-day moving average could serve as a noteworthy bellwether for risk trends headed into next week. I remain cautious below ~4,480. $SPX $ES https://t.co/qogkjs1Sx2
  • USD/JPY trades to a fresh monthly (110.57) amid the pickup in longer-dated US Treasury yields, and the exchange rate may stage a larger advance over the coming days. Get your market update from @DavidJSong here:https://t.co/dlNXOrJnM9 https://t.co/LCQd26W1zF
Gold Price Outlook: Recovery Testing Resistance at Prior Support

Gold Price Outlook: Recovery Testing Resistance at Prior Support

Michael Boutros, Strategist

Gold rebounded from technical support this week with the rally now testing a critical inflection zone in price. These are the updated targets and invalidation levels that matter on the XAU/USD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Daily Price Chart (XAU/USD)

Gold Daily Price Chart (XAU/USD)

Technical Outlook: In our latest Gold Weekly Technical Outlook we stated that, “Put simply, IF gold prices are going to rebound, next week would be the time- and the support zone we’re trading into would be the place.” The sell-off got a little deeper than expected with price registering a low at 1196 before rebounding with the recovery now testing key near-term, resistance at 1214/16 – a region defined by the November open, the May 2017 low and the 100-day moving average. Note that this pivot zone has fueled numerous price inflections over the past few months and a breach / close above would be needed to suggest a more significant low is in place.

A slight adjustment to our channel keeps the focus on 1201 for support (also the monthly low-day close) – a break below this level risks substantial losses for the yellow metal with such a scenario targeting subsequent support objectives at 1192 an 1180.

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Gold 240min Price Chart (XAU/USD)

Gold 240min Price Chart (XAU/USD)

Notes: A closer look at price action shows gold rebounding off the lower bounds of the ascending pitchfork formation we’ve been tracking for the past few weeks. A near-term descending slope off the highs caught the lows this week an ultimately a topside breach is needed to shift the broader focus higher again.

Initial resistance stands at 1214/16 backed by 1220 and the 61.8% retracement at 1225. A breach above the median-line of the broader structure (currently ~1230) would put the focus back on a test of more significant long-term resistance zone at 1236/38- look for a larger reaction there IF reached.

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Bottom line: We’re looking for evidence / constructive price action to suggest this week’s decline was just a washout with a breach of this near-term formation to offer guidance. From a trading standpoint, I’ll favor fading weakness while above 1203 with near-term bullish invalidation steady at 1201. That said, use caution here - trader sentiment is showing a large build in retail long-positioning and highlights the risk for another pullback before resumption.

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

Gold Trader Sentiment

Gold Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +6.3 (86.3% of traders are long) – bearish reading
  • Long positions are4.0% lower than yesterday and 4.7% higher from last week
  • Short positions are 12.7% lower than yesterday and 16.5% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com

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

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