Gold Price Weekly Technical Outlook: XAU/USD Rebound to Fizzle
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Gold prices are poised for a second weekly advance with the precious metal up 0.37% to trade at 1303 ahead of the New York close on Friday. Here are the key targets & invalidation levels that matter on the Gold (XAU/USD) weekly chart.
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Gold Weekly Price Chart (XAU/USD)
Notes:In my previous Gold Weekly Technical Outlook we noted that, “The immediate focus is on a reaction lower towards the yearly range lows,” after price reversed just pips from the 2018 high-week close at 1350. The decline registered a low at 1280 before rebounding precisely off former pitchfork resistance, now support and is poised to close at key pivot zone we’ve been tracking at the 2018 open at 1303.
Recent price action suggests the threat remains for another low in price before resumption of the broader uptrend. That said, key support remains at the yearly opening-range lows / 38.2% retracement at 1275/76 – a break below there would expose a drop toward broader bullish invalidation at 1253. Resistance stands with the yearly high-week close at 1327 with a topside breach there shifting the focus back toward the 2018 high-week close at 1350.
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Weakness beyond 1303 would leave the price vulnerable to another attempt at the yearly lows – look for a bigger reaction there IF reached. From a trading standpoint, the threat is lower but ultimately the decline may offer more favorable long-entries closer to slope support. Stabilization above monthly open resistance at 1313 would bode well for the bulls. Review my latest Gold Price Outlook for a closer look at the near-term trading levels.
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Gold Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +2.9 (74.4% of traders are long) – bearish reading
- Long positions are 1.3% higher than yesterday and 9.8% lower from last week
- Short positions are9.7% lower than yesterday and 10.0% 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 more net-long than yesterday but less net-long from last week and the combination of current positioning and recent changes gives us a further mixed Gold (XAU/USD) trading bias from a sentiment standpoint.
See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
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