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Gold Weekly Technical Outlook: Price Rally Pulls Back ahead of FOMC

Gold Weekly Technical Outlook: Price Rally Pulls Back ahead of FOMC

2018-12-16 00:00:00
Michael Boutros, Strategist
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Gold Weekly Technical Outlook: Price Rally Pulls Back ahead of FOMC

In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend.Gold prices snapped a three-week winning streak with the precious metal off by nearly 1% ahead of the New York close on Friday. Here are the key targets & invalidation levels that matter on the Gold (XAU/USD) weekly chart heading into the close of the year.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

Notes:In my most recent Gold Technical Outlook we noted that price was, “responding to up-slope resistance and while we could see some near-term weakness, the focus remains higher while above within this formation” (channel formation in red). Gold is testing near-term support into the close of the week at 1234/36 where the 2017 December low converges on the 200-week moving average with more significant support seen at 1216/21- a region defined by the December open, the 38.2% retracement of the August advance and basic channel support. A break here would risk a larger setback with such a scenario targeting broader bullish invalidation at the yearly low-week close at 1184.

Initial resistance stands at the 50% retracement of the yearly range at 1263 with a breach above the highlighted slope confluence at 1270 needed to validate a larger reversal in price targeting 1287 and the 2018 open at 1302.

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

Bottom line:

The immediate threat remains for a deeper pullback IF price slips below 1234 but the medium-term focus remains higher while above 1216. From a trading standpoint, look for weakness to offer more favorable entries lower down near slope support.

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

Gold Trader Sentiment

Gold
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +3.55 (78.0% of traders are long) – bearish reading
  • Long positions are 1.4% higher than yesterday and 5.8% higher from last week
  • Short positions are 2.0% lower than yesterday and 4.9% higher 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 & last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.

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

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

Other Weekly Technical Forecast:

Australian Dollar Forecast – AUD Prices May Fall Into 2019, AUD/CAD at Risk to Reversal Pattern

British Pound Forecast – Seven Weekly Bear Candles Dominate

US Dollar Forecast – Dollar Hits an 18-Month High as Anti-Currency Demand Fights Liquidity

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

Oil Forecast –Crude oil may See Light in Tunnel As Oncoming Train

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

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