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Gold Weekly Technical Outlook: Breakout at Initial Resistance Targets

Gold Weekly Technical Outlook: Breakout at Initial Resistance Targets

2018-10-28 10:00:00
Michael Boutros, Strategist
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Gold Technical Outlook

Gold prices were higher this week with the precious metal up more than 1.1% to trade at 1240 ahead of the New York close on Friday. The rally marks the fourth consecutive week of advances in gold with price now testing a critical weekly resistance zone. Here are the updated targets and invalidation levels that matter on the XAU/USD weekly chart into the monthly close. 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 Weekly Price Chart

Gold Weekly Technical Outlook: Breakout at Initial Resistance Targets

Technical Outlook: In our last Gold Weekly Technical Outlook, we continued to highlight a critical resistance confluence 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.” Price is testing this zone now and a weekly close above is needed to keep the immediate long-bias viable.

A breach targets subsequent topside resistance objectives along the 75% line (currently ~1250s) backed by the 50% retracement of the yearly range at 1262. Interim weekly support remains at 1210 with broader bullish invalidationsteady at the yearly low-week close at 1184.

Why does the average trader lose? Avoid these Mistakes in your trading

Bottom line: The broader outlook remains constructive for gold but the immediate advance takes price into a pivotal resistance confluence. Gold needs to close above 1238 to keep the rally alive. A close below would leave the risk for a pullback heading into the close of the month with such a scenario to offer more favorable long-entries closer to 1210/14. 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

Gold Weekly Technical Outlook: Breakout at Initial Resistance Targets
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +4.77 (82.7% of traders are long) – bearishreading
  • Long positions are2.5% lower than yesterday and 0.3% lower from last week
  • Short positions are 2.9% higher than yesterday and 10.2% 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. Yet, traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Gold trading bias from a sentiment standpoint.

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

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Gold Weekly Technical Outlook: Breakout at Initial Resistance Targets

Economic Calendar - latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

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- Written by Michael Boutros, Currency Strategist with DailyFX

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

Other Weekly Technical Forecast:

Australian Dollar Forecast: AUD/USD Price Sets Up for a Rise, GBP/AUD Risks Extending Reversal

British Pound Forecast: GBPUSD Short-Term Chart Looks Oversold

US Dollar Forecast: Dollar Advancing to 16-Month Highs Depends on Its Preferred Correlation

Equity Forecast: Technical Forecast for Dow, S&P 500, DAX, FTSE 100 and Nikkei

Euro Forecast: Can the Euro Continue Friday's Reversal?

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

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