- Gold price s set to challenge October range highs into the close of the month
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Gold prices are attempting a near-term breakout with the post-FOMC rally taking prices back towards the monthly range highs. These are the updated targets and invalidation levels that matter on the XAU/USD charts this week. Review my latest Weekly 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 XAU/USD was continuing to range just below channel resistance extending off the yearly highs – a topside breach late last week failed just below key resistance / the monthly opening-range highs at 1520/22. The pullback failed ahead of the monthly range lows with price posting and outside-day reversal on the back of yesterday’s FOMC interest rate decision.
Look for support at yesterday’s reversal close at 1495 IF this break is legit with a breach above 1520/22 needed to mark resumption of the broader uptrend. Ultimately, gold remains within the confines of the monthly opening-range (literally the first three days of the month) and we’re looking for the break for further guidance on our medium-term outlook.
Gold Price Chart - XAU/USD 120min
Notes: A closer look at gold price action shows XAU/USD trading within the confines of an ascending pitchfork formation extending off the monthly lows. I’ve had to tweak this slop a few times, but the gradient seems to be holding. Note that the 1.382% parallel converged on the 61.8% retracement yesterday, catching the lows on the post-FOMC washout- so was that the low? Price is now testing the median-line / objective weekly opening-range highs a 1508- a breach / close above this threshold is needed to keep the focus on 1520/22.
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Bottom line: Gold prices reversed sharply off confluence support this week with the advance now eyeing the monthly range highs. From a trading standpoint, a good spot to raise protective stops – look to reduce long-exposure on a stretch towards 1519/22. IF price fails here today, watch for support into 1495 to keep the long-bias viable – ultimately weakness below 1482 would be needed to suggest a that in fact a larger correction is underway. 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 +2.22 (68.96% of traders are long) – bearishreading
- Long positions are11.20% lower than yesterday and 2.60% higher from last week
- Short positions are7.18% higher than yesterday and 2.52% 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 less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Gold 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
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