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Gold prices are poised to rally for a third consecutive week and would mark the eleventh advance in the past thirteen weeks. The price breakout ran into a critical resistance zone we’ve been tracking for months now and leaves the broader long-bias vulnerable while below up-trend resistance. These are the updated targets and invalidation levels that matter on the XAU/USD weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.

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

Gold Price Chart - XAU/USD Weekly

Gold Price Chart - XAU/USD Weekly - GLD Trade Outlook - Technical Forecast

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

Notes: In my last XAU/USD PriceOutlook we noted that gold was, “testing a critical resistance confluence at 1522/26 and we’re looking for a reaction up here.” Price briefly registered a high at 1534 before reversing sharply with the focus now on a weekly close in relation to this key threshold. Note that weekly RSI now has momentum at the highest reading since the record 2011 high.

Weekly support remains with the 50% retracement of the decline off the record highs at 1483 backed by key support / medium-term bullish invalidation at 1451. A topside breach exposes subsequent weekly resistance objectives at 1558 and the 61.8% retracement at 1586- look for a bigger reaction there IF reached.

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

Bottom line: The gold breakout is testing major confluence resistance up here - watch the weekly close. The risk for a near-term pullback / correction mounts if we settle below 1526. From a trading standpoint, a good place to reduce long-exposure / raise protective stops – be on the lookout for possible exhaustion. Ultimately a larger pullback may offer more favorable entries closer to slope support. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading

Gold Trader Sentiment (XAU/USD)

Gold Trader Sentiment - XAU/USD Price Chart - GLD Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +1.69 (62.9% of traders are long) – bearish reading
  • Long positions are 3.1% higher than yesterday and 9.6% higher from last week
  • Short positions are 1.4% higher than yesterday and 8.1% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger Spot 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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Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex