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Gold Rate May Dip Further – Bearish Signals on XAU/USD Price Chart

Gold Rate May Dip Further – Bearish Signals on XAU/USD Price Chart

Mahmoud Alkudsi, Analyst
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Gold - XAU/USD Outlook

Check our Q4 forecasts for EUR, USD, Oil and find out for free what might move the price this quarter.

Gold – Slower Downtrend Impulse

On Nov 12, Gold declined to $1,445 – its lowest level in over three months. However, the price rallied after, and settled above $1,450. On Friday, the precious metal closed the weekly candlestick in the green with a 0.6% gain.

Last week, the Relative Strength Index (RSI) rose from 34 to 43 then remained flat after, indicating to a weaker downtrend momentum.

Having trouble with your trading strategy? Here’s the #1 Mistake That Traders Make

Gold DAILY PRICE CHART (Oct 28, 2018 – Nov 18, 2019) Zoomed out

Gold price daily chart 18-11-19 Zoomed out

Gold DAILY PRICE CHART (15 JUly – Nov 18, 2019) Zoomed In

Gold price daily chart 18-11-19 Zoomed in

Looking at the daily chart, we notice in Nov 4 Gold rebounded from the upper line of the bullish channel originated from June. The price declined to a lower trading zone $1,440- $1,510, then broke below 50-day average eyeing a test of the low end of the channel.

On Nov 11, XAU/USD broke below the channel. However, the price reverted back then remained above the lower line of it. Hence, a bearish signal could be generated if sellers were successful in leading Gold out of the channel.

Additionally, a close below the low end of the trading zone i.e. below $1,440 could send XAU/USD towards 200-Day average then towards $1,400 handle. That said, the weekly support level and area marked on the chart (Zoomed in) should be kept in focus.

In turn, any failure in closing below the low end could mean seller’s hesitation to continue pressing Gold. This may lead XAU/USD to correct towards the high end of the zone. In that scenario, the price would encounter resistance on the lower line of the aforementioned uptrend channel.

Just getting started? See our Beginners’ Guide for FX traders

Gold Four-HOUR PRICE CHART (Oct 22 – Nov 18, 2019)

Gold price four hour chart 18-11-19

From the four-hour chart, we notice on Wednesday Gold broke above the downtrend line originated from the Nov 4 high at $1,514 eyeing a test of $1,474 as explained on the chart. On the following day the price reached this level, then remained flat after.

Hence, a break below $1,457 could persuade XAU/USD sellers to press towards $1,440. Although, they need to consider the Nov 12 Low at $1,445. On the other hand, any break above $1487 may embolden buyers to push towards $1,498. However, they need to keep an eye on the daily resistance level underlined on the chart.

See the chart to know more about key technical levels in a further bullish/bearish scenario.

Join Me on Friday, Nov 22 at 14:00 GMT. In this session we will talk about most common Continuation patterns and how to trade them.

Written By: Mahmoud Alkudsi

Please feel free to contact me on Twitter: @Malkudsi

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.