- Gold price recovery approaching downtrend resistance-
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Gold prices have rallied more than 3.3% off the monthly lows with the advance now targeting near-term downtrend resistance. We’re looking for a reaction up here with the recovery at risk heading into these levels. These are the updated targets and invalidation levels that matter on the XAU/USD charts this week. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.
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Gold Price Chart - XAU/USD Daily
Chart Prepared by Michael Boutros, Technical Strategist; Gold on Tradingview
Technical Outlook: In my latest Gold Price Outlook we noted that we were, “taking a neutral stance here near-term from a trading standpoint. Look for exhaustion on a stretch towards confluence resistance at 1506- a reaction there should offer some guidance.” Price is hovering at theses levels now with the recent recovery trading just below September channel resistance.
Interim support rests at the highlighted trendline around ~1482 backed by the monthly open at 1472. Critical support remains at 1460/61. A topside breach above this channel would look to challenge key confluence resistance at late-2011 / 2012 lows at 1522/26- a close above this threshold would be needed to mark resumption.
Gold Price Chart - XAU/USD 120min
Notes: A closer look at gold price action shows XAU/USD continuing to trading within the confines of a near-term descending pitchfork formation extending off the late-September highs. The weekly opening-range has taken shape just below the upper parallel and we’re looking for the break to offer guidance. A topside breach above 1512 would expose a run on key resistance at 1522/26- look for a bigger reaction there IF reached.
Interim support rests at 1494/96 with a break below 1488 needed to open a larger decline in gold prices. Subsequent support objectives rest with the early-September swing lows / 61.8% retracement of October range at 1482/83 and the monthly open at 1472- and area of interest for possible exhaustion IF reached.
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Bottom line: The recent gold price recovery is vulnerable here while below near-term downslope resistance. From at trading standpoint, the immediate focus is on a break of the weekly opening-range with the risk lower while within this formation – a good spot to raise protective stops / reduce long-exposure. IF price breaks higher, look for an accelerated advance towards 1522/26. 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 - XAU/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +1.84 (64.8% of traders are long) – bearishreading
- Long positions are3.3% lower than yesterday and 12.7% lower from last week
- Short positions are6.1% higher than yesterday and 5.3% 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 and the recent changes in positioning 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
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