Gold Price Could Decline to Monthly Support -XAU/USD Technical Forecast
Gold - XAU/USD Outlook
Gold Price – Multi-Year High
Last week, Gold rallied to $1,611- its highest level in over six years. The price declined after and settled below $1,600 handle as some buyers took profit. On Friday, the weekly candlestick closed with 0.6% loss. Yet, with a Doji pattern highlighting a possible reversal of current uptrend momentum.
Alongside that, the Relative Strength Index (RSI) dipped below 50 indicating that uptrend move lost momentum.
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Gold DAILY PRICE CHART (MaY 31, 2018 – Jan 14, 2020) Zoomed out
Gold DAILY PRICE CHART (July 31 – Jan 14,2020) Zoomed In
Looking at the daily chart, we notice yesterday Gold pointed lower and returned to the lower trading zone $1,555 - $,1526 signalling that more buyers were taking profits.
A close below $1,526 could encourage more buyers to exit the market. This opens the door for sellers to take charge and peruse sending the price towards $1,453. In that scenario, the weekly support levels and area marked on the chart should be considered as some traders may exit/ join the marker nearby these points.
Having said that, another close above $1,558 reflects some buyer’s reluctance to exit the market. This could lead the price towards $1,625 contingent on clearing the weekly resistance level underlined on the chart.
Gold Four-HOUR PRICE CHART (Oct 15 – Jan 14,2020)
From the four-hour chart, we notice yesterday XAUUSD broke below the uptrend line originated from the Jan 9 low at $1,540 eyeing a test of the low end of current trading zone discussed above on the daily chart.
A break below $1,517 could lead XAU/USD towards $1,498. Yet, the weekly support level underscored on the chart should be watched closely. On the flip side, any break above the Jan 10 high at $1,563 may push the price towards $1,590. Although, the daily resistance level underlined on the chart would be worth monitoring.
See the chart to know more about key levels Gold would encounter in a further bearish scenario.
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Written By: Mahmoud Alkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.