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Gold Price Technical Outlook: GLD Targeting Yearly Open Support

Gold Price Technical Outlook: GLD Targeting Yearly Open Support

2019-04-04 17:00:00
Michael Boutros, Strategist
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Gold prices are down nearly 3% from the March highs with decline taking price into near-term downtrend support ahead of tomorrow’s Non-Farm Payroll (NFP) release. These are the updated targets and invalidation levels that matter on the XAUUSD charts.

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Gold Daily Price Chart (XAUUSD)

Gold Price Chart- GLD Daily - XAUUSD

Technical Outlook: In my last Gold Weekly Technical Outlook we noted that prices were, “poised for a reversal off the yearly high-week close and leaves the risk lower heading into the April open. From trading standpoint, look for a reaction in price on a move towards confluence support at 1275 or 1258 – both levels of interest for possible price exhaustion.” Price registered a low at 1280 today with the decline responding to near-term confluence support at the 100-day moving average / January trendline.

Key support remains at, 1275/76, “where the objective yearly opening-range low converges on the 38.2% retracement of the 2018 advance and former pitchfork resistance.” Daily resistance steady at 1302 with a breach / close above the February trendline (bearish invalidation) needed to shift the focus back to the topside targeting 1322.

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Gold 120min Price Chart (XAUUSD)

Gold Price Chart - GLD 120minute - XAUUSD

Notes: A closer look at price action shows Gold trading within the confines of a near-term descending pitchfork formation extending off the March highs with XAU/USD attempting to break below the lower parallel today in New York trade. There are a few slopes at play here, but the general threat is for a near-term recovery within the confines of this multi-day descending channel (red).

Initial resistance stands at 1293 with a topside breach above 1297 needed to challenge 1302- both areas of interest for possible exhaustion. Yearly open support steady at 1280 – weakness beyond this threshold targets a more significant confluence at 1275/76- look for a larger reaction there IF reached (are of interest for possible long-entries).

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Bottom line: The immediate threat is for a near-term recovery here but ultimately, we’re looking for low final low in price while below 1302. From a trading standpoint, look for exhaustion on a rally towards the March trendline targeting the yearly open. A move lower may offer more favorable long-entries closer to the 2019 range lows. Review our latest Gold 2Q forecasts for a longer-term look at the technical picture for XAUUSD.

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 - GLD Positioning - XAUUSD Price
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.31 (76.8% of traders are long) – bearishreading
  • Long positions are3.6% higher than yesterday and 8.0% higher from last week
  • Short positions are 6.6% lower than yesterday and 9.4% 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 & last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.

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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