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Gold Technical Forecast: Gold Break Rejected- XAU/USD Bulls on Notice

Gold Technical Forecast: Gold Break Rejected- XAU/USD Bulls on Notice

Michael Boutros, Strategist

Gold Technical Price Forecast: XAU/USD Weekly Trade Levels

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Gold prices are set to snap a three-week winning streak with a volatile session charging a weekly range of more than 5.1% in XAU/USD. War headlines regarding the Russian invasion of Ukraine sparked a massive rally in gold but the bulls were unable to mark a daily close above key technical resistance. The threat rises for a more sizable pullback in the days ahead before resumption of the broader uptrend in gold. These are the updated targets and invalidation levels that matter on the weekly technical chart. Review my latest Weekly Strategy Webinarfor an in-depth breakdown of thisgold technical setup and more.

Gold Price Chart - XAU/USD Weekly

Gold Technical Forecast: Gold Break Rejected- XAU/USD Bulls on Notice

Chart Prepared by Michael Boutros, Technical Strategist; Gold on Tradingview

Notes: In my last Gold Weekly PriceOutlook we noted that XAU/USD, “breakout has extended into uptrend resistance and the immediate advance may be vulnerable in the days ahead.” The zone in focus was 1903/23- a region defined by the 2021 high close and the 61.8% Fibonacci retracement of the 2020 decline. Gold ripped higher this week amid the barrage of war headlines with price briefly registering an intraday high at 1974 before reversing sharply lower – is a near-term high in place this time?

Weekly support now rests at the 2021 high-week close / 61.8% retracement of the 2022 range at 1849/54 with broader bullish invalidation unchanged at the yearly low-week close at 1791. A topside breach / close above 1923 is needed to mark resumption with such a scenario exposing subsequent resistance objective at 2021 swing high again at 1959 and the record high-week close at 2034.

Bottom line: The gold rally faltered this week into uptrend resistance and the threat for near-term exhaustion remains while below 1923. From at trading standpoint, a larger pullback here may offer more favorable opportunities closer to trend support - losses should be limited to 1849 IF price is indeed heading higher on this stretch and we’ll be on the lookout of an exhaustion low in the weeks ahead. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trade 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 – XAU/USD Price Chart

Gold Technical Forecast: Gold Break Rejected- XAU/USD Bulls on Notice
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.55 (71.85% of traders are long) – typically bearishreading
  • Long positions are9.18% lower than yesterday and 5.51% higher from last week
  • Short positions are 12.90% lower than yesterday and 34.23% lower 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 and last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.

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Previous Weekly Technical Charts

- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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

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