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Gold Price Technical Outlook: XAU/USD Soars to Nine-Year Highs

Gold Price Technical Outlook: XAU/USD Soars to Nine-Year Highs

2020-07-09 15:30:00
Michael Boutros, Strategist
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Gold Technical Price Outlook: XAU/USD Near-term Trade Levels

Gold prices surged to fresh nine-year highs today with XAU/USD up more than 2% this week. While the broader outlook remains constructive, the immediate advance may be vulnerable heading into technical resistance just higher and a pullback may offer more favorable opportunities in the days ahead. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts in the days ahead. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold trade setup and more.

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Gold Price Chart - XAU/USD Daily

Gold Price Chart - XAU/USD Daily - GLD Trade Outlook - GC Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; Gold on Tradingview

Technical Outlook: In my last Gold Price Outlook we noted that the XAU/USD, “breakout is probing fresh yearly highs and a close above 1765 is needed to keep the immediate long-bias viable.” Price held this zone for three days before breaking higher into the close of the June trade with the subsequent rally taking out the 2012 highs yesterday at 1795- look for initial support there now. Topside daily resistance objectives at the 88.6% Fibonacci retracement of the decline off the record high at 1820 and the record high-week close / upper parallel at 1856. Bullish invalidation now raised to the weekly open at 1779.

Gold Price Chart - XAU/USD 120min

Gold Price Chart - XAU/USD 120min - GLD Trade Outlook - GC Technical Forecast

Notes: A closer look at Gold price action sees XAU/USD continuing to trade within the confines of an ascending pitchfork formation extending off the June lows with the rally now riding the 75% parallel as resistance. Initials support at 1795 backed closely by 1789 – bullish invalidation now raised to the June 24th swing high / lower parallel at 1779. A topside breach / close above 1820 is needed to keep the advance viable towards the upper parallel (currently near ~1830s) and 1856.

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Bottom line: The gold price rally has broken to fresh multi-year highs with the advance now approaching longer-term resistance hurdles. From at trading standpoint, the outlook remains constructive while within this formation but the immediate advance may be vulnerable near-term heading into the upper parallels. Look for downside exhaustion ahead of 1779 on pullbacks IF price is indeed heading higher with a breach above 1820 needed to fuel the next leg higher in price. Review my latest Gold Weekly Price 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

Gold Trader Sentiment - XAU/USD Price Chart - GLD Trade Outlook - GC Technical Foercast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +1.81 (64.36% of traders are long) – bearishreading
  • Long positions are5.60% higher than yesterday and 3.56% lower from last week
  • Short positions are 3.72% lower than yesterday and 22.68% higher 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 more net-long than yesterday but less net-long from last week. The combination of current positioning and recent changes gives us a further mixed Gold trading bias from a sentiment standpoint.
Gold BEARISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -3% -9% -4%
Weekly -5% -7% -5%
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- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

https://www.dailyfx.com/authors/bio/Michael_Boutros?ref-author=Boutros

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

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