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XAU/USD Technical Outlook: Gold Price Breakout Pending

XAU/USD Technical Outlook: Gold Price Breakout Pending

2018-06-08 17:00:00
Michael Boutros, Technical Strategist
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Gold Daily Price Chart (XAU/USD)

Gold Price Chart - XAU/USD - Daily Timeframe

Technical Outlook: Gold prices (XAU/USD) have set a well-defined June opening range just below a key resistance range at 1302/07- a region defined by the October highs, the January, March and May lows and the yearly open. Note that the 75% line of the descending pitchfork formation also converges on this region into the start of next week with a pending RSI resistance trigger in view.

A breach above this key region shifts the focus to a more significant resistance confluence level at 1313/15 where he upper parallel converges on the 100% extension and 38.2% retracement (bearish invalidation).

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Gold 240min Price Chart (XAU/USD)

Gold Price Chart - XAU/USD - 240min

Notes: A closer look at near-term price action sees gold prices consolidating off the May lows with our immediate focus on a break of the 1291-1305 range. A topside breach would shift the focus towards 1313/15- an area of interest for possible near-term exhaustion / short-entries.

A break below 1291 shifts the focus back towards the 61.8% retracement at 1285- weakness beyond this level would mark resumption for the broader downtrend with such a scenario targeting 1263.

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Bottom line: Technical considerations made earlier in the week on the US Dollar (DXY), favor a near-term topside breach of this consolidation in gold prices before moving lower. That said, we would need to breach downslope resistance (1315) to suggest a more significant low is in place. For now, look for a break of this near-term consolidation range heading into next week with central bank interest rate decisions next week from the FOMC, ECB & BoJ and the Trump / Kim Jong Un, North Korean Summit likely for fuel added volatility in ‘risk sensitive’ assets.

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

Spot Gold IG Client Positioning

Gold Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.86 (79.4% of traders are long) –bearishreading
  • Long positions are 0.8% lower than yesterday and 2.2% lower from last week
  • Short positions are 9.3% higher than yesterday and 13.8% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current Spot 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!

Economic Calendar- Stay updated on the latest economic developments and upcoming event risk

Other Setups in Play

- Written by Michael Boutros, Currency Strategist with DailyFX

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

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

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