Gold Price Outlook: Gold Prices Bounce, Can Bulls Continue to Push?
Gold Price Talking Points:
- Gold prices tested the 1475 level late last week. Buyers soon showed up and prices bounced into last week’s close and that push has so far held through this week’s open.
- Longer-term Gold price action remains in a bull flag formation and the big zone of resistance looked at last week has continued to constrain the advance.
- 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 Prices Pullback to Support – Are Bulls Ready to Re-Take Control?
Last week saw a continuation of the pullback in Gold prices. As discussed on Monday, a long-term zone of resistance continued to loom large as Gold prices still showed tendencies of correction after this summer’s near-parabolic bullish jump. That resistance zone runs between Fibonacci levels at 1509 and 1527. This area first came into play in early-August and has had some element of bearing in Gold prices each week since. This zone has previously been used to set up near-term short-side setups.
Gold Price Weekly Chart
Gold Price Resistance Brings on Bull Flag
As that longer-term zone of resistance has come into play, the correction in Gold prices has taken on the form of a bull flag formation. This will often be approached with the aim of bullish continuation although, as usual with trend approaches, the element of complexity is timing; and as looked at last week, there are basically two ways of proceeding: Either looking for a longer-term level of support coming into play, or, alternatively, by letting bulls push forward with fresh near-term highs to break the resistance side of the formation before jumping back on the long side.
The first of those two support zones came into play last Friday morning. This runs from 1475-1480, and this zone helped to arrest last week’s pullback while propelling prices back up towards the 1500 handle.
Gold Price Eight-Hour Chart
Gold Price Strategy Moving Forward
At this point, a similar approach as last week could be an attractive manner of moving forward: Focusing on upside and looking for either a) a test of support or b) a break of the bull flag signaling a larger continuation of the bigger picture bullish trend.
Given last weeks’ resistance hold, traders looking to address the move with outside price action would likely want to allow for the 1527 level to first be tested through in order to indicate continuation after a bull flag break.
For those looking for higher-low support potential, that same zone from 1475-1480 could be re-used but, more attractively, that deeper support level around the 1450 area can continue to be followed, looking for buyers to load-in after a deeper pullback. That 1453 level held the highs in July but, as yet, hasn’t been tested for support.
Gold Price Four-Hour Chart
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.
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--- 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.