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Gold Price Targets: XAU/USD Searches for Direction at Six-Year Highs

Gold Price Targets: XAU/USD Searches for Direction at Six-Year Highs

2019-09-04 15:30:00
Michael Boutros, Technical Strategist
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Gold prices are carving a well-defined weekly holding a tight range just above a key pivot zone and while the broader outlook remains weighted to the topside, the advance may be vulnerable near-term. These are the updated targets and invalidation levels that matter on the XAU/USD charts this week. Review this my latest Strategy Webinar for an in-depth breakdown of this gold trade setup and more.

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

Gold Price Chart - XAU/USD Daily

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

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

Technical Outlook: In my latest Gold Price Outlook we noted that, “we remain neutral at these levels- look for possible topside exhaustion while below 1558 if price rebounds here with a break / close below 1522 needed to suggest a larger decline is underway.” A week later and price has continued to range just above a critical pivot zone we’ve been tracking for months now at 1522/26. Note that the September open registered at 1522 and further highlights the technical significance of this key threshold.

Initial resistance remains at 1558 with a break higher targeting longer-term objectives at the confluence of the upper parallel and the 61.8% retracement of the entire decline off the record 2011 highs at 1586. Keep in mind gold has now marked a third divergence high in price with daily RSI holding a multi-month support trigger. Weakness beyond the monthly open would risk a larger setback in gold prices with such a scenario targeting channel support around the 8/13 low near 1479 – an area of interest for possible exhaustion / long-entries IF reached.

Gold Price Chart - XAU/USD 240min

Gold Price Chart - XAU/USD 240min - GLD Trade Outlook - Technical Forecast

Notes: A closer look at gold price action shows XAU/USD trading within the confines of a well-defined ascending pitchfork formation we’ve been tracking off the July 17th / August 1st lows. Price is trading just below the median-line near 1550- a topside breach would once again expose 1558- look for a bigger reaction there IF reached. A break below the 61.8% retracement of the recent advance at 1516 risks a test of the lower parallel near 1510- we’ll reserve this threshold as our near-term bullish invalidation level.

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Bottom line: Gold prices are trading just below the August highs and while the broader outlook remains weighted to the topside, the immediate advance remains vulnerable while below 1558 near-term. From at trading standpoint, the focus is on a break of the weekly opening-range – a downside break risks a deeper correction in price with a larger pullback to offer more favorable long-entries near trend support. A breach / close above 1558 is ultimately needed to mark resumption of the broader uptrend. Review my latest Gold Price Weekly Outlook for a closer look at the longer-term XAU/USD technical trading levels.

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 - XAU/USD Price Chart - GLD Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +1.45 (59.2% of traders are long) – weak bearishreading
  • Long positions are11.1% lower than yesterday and 3.9% lower from last week
  • Short positions are15.3% higher than yesterday and 6.4% 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. 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!

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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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