Gold Weekly Technical Outlook: Price Rally Pulls Back ahead of FOMC
- Updated weekly technicals on Gold – risk for near-term weakness but constructive above 1216
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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.
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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.
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Gold Trader Sentiment
- 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
