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Gold Price Targets: XAU Breakout Stalls- Bulls at Risk into September

Gold Price Targets: XAU Breakout Stalls- Bulls at Risk into September

Michael Boutros,
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Gold prices have surged nearly 23% off the April lows with price now attempting to breach a critical resistance zone we’ve been tracking for months now. These are the updated targets and invalidation levels that matter on the XAU/USD charts. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.

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

Gold Price Chart - XAU/USD Weekly

Gold Price Chart - XAU/USD Weekly - GLD Trade Outlook - Technical Forecast

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

Notes: In my last Gold Price Weekly Outlook we noted that XAU/USD was, “ in consolidation just below a major pivot zone and we’re looking for the breach to mark resumption of the broader uptrend- that said, the advance remains vulnerable near-term while below.” The focus remains on a key resistance confluence at 1522/26 where the December 2011 & 2012 lows converges on a pair of uptrend resistance slopes.

A breakout early in the week saw gold prices fail just pips ahead of the 1558 resistance target before pulling back with the immediate focus once again on the weekly close in relation to the 1522/26 confluence zone. Note that weekly momentum readings have reached the highest levels since the 2011 record highs in Gold and continues to suggest the advance may be at risk as price attempts to close, what would be, the fifth-consecutive weekly advance. While the broader outlook does remain constructive, at this point, things are a bit stretched up here.

A topside breach / weekly close above would keep the focus on subsequent resistance objective at 1558 and the key 61.8% retracement of the decline off the 2011 record highs at 1586- look for a bigger reaction there If reached. Failure to close above this key threshold this week would leave the risk for a deeper correction towards slope support at the highlighted trendline confluence around ~1465. Ultimately a larger pullback would have us targeting more favorable long-entries near trend support.

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

Bottom line:Watch the weekly close – IF price fails to hold above the 1522/26 zone, look for weakness back towards uptrend trend support into the start of September trade. From a trading standpoint, a good region to reduce long-exposure / raise protective stops – be on the lookout for possible topside exhaustion with a break back below the 2015 / 2016 trendline (red) resistance needed to suggest a more significant high was registered this week. A valid close above would keep the focus on the 1586 resistance target. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

Even the most seasoned traders need a reminder every now and then- Avoid these Mistakes in your trading

Gold Trader Sentiment (XAU/USD)

Gold Trader Sentiment - XAU/USD Price Chart - GLD Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +1.81 (64.5% of traders are long) – bearish reading
  • Long positions are 1.0% higher than yesterday and 5.2% lower from last week
  • Short positions are 6.5% lower than yesterday and 6.0% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger Spot Gold-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!


Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical 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.