- Updated weekly technicals on Gold – risk for near-term weakness but constructive above 1236
- Check out our 4Q 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 look at the broader technical picture to gain a bit more perspective on where we are in trend.Gold prices are posed to mark a third consecutive weekly advance with the precious metal up 0.24% to trade at 1283 ahead of the New York close on Friday. Here are the key targets & invalidation levels that matter on the Gold (XAU/USD) weekly chart as heading into January trade.
New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide
Gold Weekly Price Chart (XAU/USD)
Notes:In my most recent Gold Technical Outlook we noted that our focus was higher in price while above 1236 with topside targets, “eyed the upper parallel (blue) / 1.618% extension of the yearly advance at 1268/70.” Gold ripped through this zone into the close of the year with the advance failing just ahead of the 2018 open at 1302 this week.
Note that weekly RSI has risen to its highest level since 2017 and although the breakout of the 2017 / 2018 pitchfork (blue) does leave the focus higher, the immediate advance may be vulnerable if price closes the week below the key 61.8% retracement of the 2018 range at 1287. Look for support back at the highlighted confluence region along the 52-week moving average at ~1269 – weakness beyond this point would risk a more significant setback with broader bullish invalidation steady at 1236.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line:IF this breakout is legit, price would need to stabilize above 1269 with topside targets at 1302 backed by 1322. From a trading standpoint, Friday is poised to mark an outside-day reversal and highlights the threat for further weakness near-term. Ultimately, we’ll be looking for weakness to offer more favorable entries lower down near confluence support.
Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading
Gold Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +2.84 (74.0% of traders are long) – bearish reading
- Long positions are 7.9% lower than yesterday and 5.8% lower from last week
- Short positions are 6.7% lower than yesterday and 1.5% 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. 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!
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex