- Gold price reversal testing October trendline resistance - constructive above 1210
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Gold prices have continued to consolidate just below multi-month slope resistance and the battles lines are drawn heading into the December trade. These are the updated targets and invalidation levels that matter on the XAU/USD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
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Gold Daily Price Chart (XAU/USD)
Technical Outlook: In our last Gold Technical Outlook our ‘bottom line’ stated that we were, “The recovery off the monthly low is now testing the first major resistance level- failure here would risk a drop back towards the lower parallels but the trade remains constructive while within this formation.” Gold registered a low this week at 1211 before reversing sharply off the 100-day moving average with the advance now back at the October trendline. A daily close above this slope is needed to mark resumption targeting critical resistance at the 1236/38 pivot zone. Key support and bullish invalidation rests with the highlighted trendline confluence around 1205.
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Gold 240min Price Chart (XAU/USD)
Notes: A closer look at price action highlights a well-defined weekly opening-range with gold testing the range highs early in New York trade. A breach here targets initial resistance objectives at the 61.8% extension of the November advance at 1232 backed by 1236/38- a breach above this threshold is needed to fuel the next leg higher with such a scenario targeting 1251 backed by the upper parallel / 1260.
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Bottom line: The monthly opening-range remains intact heading into the November close. For now, look for a break of this week’s range for guidance with our broader focus higher while within this ascending pitchfork formation. From a trading standpoint, I continue to favor fading weakness while above 1210 targeting the median-line.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Gold Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +4.01 (80.1% of traders are long) – bearishreading
- The percentage of traders net-long is now its lowest since November 6th
- Long positions are6.1% lower than yesterday and 7.8% lower from last week
- Short positions are 9.5% higher than yesterday and 1.0% lower 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. 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!
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com
