Gold Price Forecast: XAU/USD on The Brink of Upside Break Out
Gold Price - XAU/USD Technical Analysis
- From sideways to bullish
- Key chart points and signals to keep track of
On Friday, Gold rallied to a near two-week high at $1,723 then retreated and closed the weekly candlestick with a Doji pattern reflecting the market’s indecision at that point. This week, the yellow metal has pointed higher eyeing a test of the April 14 high at $1,747.
This week, the Relative Strength Index (RSI) has risen from 53 to 60 , highlighting a stronger bullish momentum.
Gold DAILY PRICE CHART (DEC 5, 2018 – May 15, 2020) Zoomed out
Gold DAILY PRICE CHART (March 9 – MAy 15, 2020) Zoomed In
Based on analysis of the daily chart, in April Gold closed above the 50-day moving average and broke above the March 9 high at $1,703. However, the market paused its rally and traded in a sideways move creating higher lows with lower highs. As a result, the price developed a symmetrical triangle pattern.
Additionally, the precious metal has tested on multiple occasions the low end of the current trading zone $1,685 - $1,752, and yet the price did not fall to the lower zone, generating a bullish signal. On Wednesday, XAU/USD rallied above the upper line of the aforementioned triangle eyeing a test of $1,796.
A close above the high end of the mentioned above trading zone could encourage more bulls to join the market and push towards $1,796. A further close above that level may extend the rally towards $1,859. In that scenario, the weekly resistance levels underlined on the chart (zoomed in) should be kept in focus.
On the other hand, any failure in closing above the high end of the zone could reverse the market’s direction towards the low end. A further close below that level reflects a weaker bullish move and may trigger a selloff towards $1,635. That said, the weekly support area and level marked on the chart should be considered.
Gold Four-HOUR PRICE CHART (April 28 – May 15, 2020)
Looking at the four-hour chart, this week XAU/USD has respected the uptrend line originated from the May 1 low at $1,670 indicating that the market may resume bullish price action.
A break above $1,763 would be another bullish signal and may cause a rally towards $1,792. Nonetheless, the resistance level underscored on the chart should be watched closely. In turn, any break in the other direction may lead to more consolidation and press XAUUSD towards $1,692. Although, the daily support level printed on the chart should be monitored.
See the chart to find out more about the key technical levels in a further bullish/bearish scenario.
Written By: Mahmoud Alkudsi, Market Analyst
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.