Gold Price: Eyes USD 1,700, Will XAU/USD Rally Further?
Gold Price - XAU/USD Technical Forecast
- Bull’s pullback then comeback
- Breakout levels to consider
XAU/USD Price – Bulls Are Back
On Friday, Gold tumbled to $1,563 – its lowest level in over three weeks. The price rallied after although, closed the weekly candlestick with nearly 3.5% loss. This week, the price recovered all last week’s losses.
Alongside that, the Relative Strength Index (RSI) crossed above 50 indicating to bullish momentum recovery.
Gold DAILY PRICE CHART (MaY 31, 2018 – Mar 6, 2020) Zoomed out
Gold DAILY PRICE CHART (July 31 – Mar 6, 2020) Zoomed In
Looking at the daily chart, we noticed that in early January Gold started uptrend move creating higher highs with higher lows. Yet, the chart warned of a possible price correction with two signals.
The first, was a bearish divergence between the price and RSI as the first carved out a high with a higher high meanwhile, the latter created a high with a lower high. The second, was in Feb 23 as the market opened with exhaustion gap after two previous gaps (breakaway & runaway gaps).
On the start of March, Gold fell to $1,563. Nevertheless, bulls came back after, as the price failed in multiple occasions to close below the 50-day average. Yesterday, the precious metal rallied to a higher trading zone $1,672 – $1,685. Thus, a close above the high end of the zone could embolden buyers to resumed bullish price action towards the vicinity of $1,752-54. That said, special attention should be paid to the weekly resistance levels underlined on the chart.
On the other hand, any close below the low end of the zone highlights bull’s reluctance. This could lead some of them to exit the market allowing the price to fall towards $1,626. Although, the daily support levels and area marked on the chart should be considered.
It’s worth noting that, any stop of the current rally around the high end of the zone could lead XAU/USD to develop a double top pattern, where the neckline resides at $1,563. A break below that level may send the price towards the vicinity of $1,453-45. In that scenario, the trading zone/s marked printed on the chart should be watched closely.
Gold Four-HOUR PRICE CHART (DEC 30 – Mar 6, 2020)
From the four-hour chart, we noticed that yesterday XAU/USD broke above the uptrend line originated from the Feb 17 low at $1,578 eying a test of the last week high at $1,689.
Hence, A break above $1,702 might cause a rally towards $1,716. Yet, the resistance level underscored on the chart would be worth monitoring. In turn, a break below $1,649 could send XAU/USD towards $1,634. Although, the daily support level printed on the chart should be kept in focus.
See the chart to know more about key levels Gold would encounter in a further bearish scenario.
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.