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Gold Price Technical Outlook: Breakout Imminent Near Seven-Month High

Gold Price Technical Outlook: Breakout Imminent Near Seven-Month High

2019-01-09 15:30:00
Michael Boutros, Technical Strategist
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Gold has continued to trade within a 1.7% range since the start of the year with price holding near seven-month highs. We’re looking for a break of the weekly opening-range for guidance with the broader outlook constructive while above 1265. 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.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Daily Price Chart (XAU/USD)

Gold Daily Price Chart - XAU/USD

Technical Outlook: In my latest Gold Weekly Technical Outlook we noted that an outside-day reversal off the early-month high left the advance vulnerable heading into the yearly open. Price has continued to hold within the confines of that day’s range - which now governs the entire monthly opening-range.

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Gold 240min Price Chart (XAU/USD)

Gold 240min Price Chart - XAU/USD

Notes: A closer look at price action highlights a near-term consolidation since the start of the year – the trade remains constructive while above 1266 with near-term support seen at the 100% extension of the decline at 1273- both areas of interest of possible exhaustion / long-entries IF reached. Key resistance remains with the 2018 yearly open at 1302 with a breach / close above needed to keep the focus towards subsequent targets at the 78.6% retracement at 1321.

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Bottom line: The broader focus is higher in gold, but the immediate advance remains vulnerable sub-1302. From a trading standpoint, we’ll continue to favor fading weakness while above 1266 targeting a topside breach of this range.

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

Gold Trader Sentiment

Gold Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +2.27 (69.4% of traders are long) – bearishreading
  • Long positions are0.4% lower than yesterday and 3.5% lower from last week
  • Short positions are 6.5% higher than yesterday and 20.6% 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!

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- Written by Michael Boutros, Currency 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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