Gold Technical Outlook
- Updated weekly technicals on Gold (XAU/USD) – price breakout targeting 1234/38
- Check out our 3Q projections in our Free DailyFX Gold Trading Forecasts
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend.Gold prices rallied for the second consecutive week with the precious metal up more than 1.3% to trade at 1219 ahead of the New York close on Friday. The advance takes prices through a key technical resistance zone and clears a multi-week range we’ve been tracking. Here are the updated targets and invalidation levels that matter on the XAU/USD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
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Gold Weekly Price Chart
Technical Outlook: Gold prices have traded within the confines of a broad ascending pitchfork formation extending off the 2013 & 2015 lows with price rebounding sharply off the lower parallel back in August. In last month’s Gold Weekly Technical Outlook I noted that, “Heading into the start of October trade, Gold prices will need to hold above support at 1171 IF the broader 2015 uptrend is to remain viable. From a trading standpoint, I’ll be looking for evidence of an exhaustion low early next month to offer more favorable long-entries while above multi-year structural support”
For nearly 8 weeks, Gold continued to trade within a well-defined range with our XAU/USD scalp report highlighting the breakout potential early in the month. This week’s outside candle takes price through the October opening-range highs and confluence resistance at 1210/14- note that he median-line of the yearly descending pitchfork converges on this zone and further highlights the technical significance of a weekly close above this threshold.
The first major weekly resistance zone on the topside is eyed at 1235/38- a region defined by the 38.2% retracement of the yearly range, the 100% extension of the advance off the August low, the December swing low and the long 200-week moving average. Look for a bigger reaction there IF reached.
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Bottom line: Gold prices have cleared a technical resistance confluence / the monthly opening-range high and keeps the outlook weighted to the topside. IF price is indeed heading higher, losses should be limited to this week’s low and we’ll raise our broader bullish invalidation level to the low-week close at 1184. From a trading standpoint, I’ll continue to favor fading weakness while above this week’s open at 1203 targeting the 1235/38 resistance range. Trading short-term? Review this week’s Gold Scalp Report for a complete technical breakdown of the intraday trading levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Gold Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +4.02 (80.1% of traders are long) – bearishreading
- The percentage of traders net-long is now its lowest since October 4th
- Long positions are15.5% lower than yesterday and 5.1% lower from last week
- Short positions are 75.3% higher than yesterday and 35.4% higher 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.
See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!
Key Economic Data Releases Next Week
- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org