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Gold Price Outlook: Gold Surges into Trend Resistance- XAU/USD Levels

Gold Price Outlook: Gold Surges into Trend Resistance- XAU/USD Levels

Michael Boutros, Strategist

Gold Technical Price Outlook: XAU/USD Near-term Trade Levels

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Gold prices rallied more than 0.56% since the start of the week with XAU/USD extending on a strong July performance off key technical support. Although the near-term outlook remains constructive, the immediate advance may be vulnerable in the days ahead as price extends into key uptrend resistance objectives. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts. Review my latest Strategy Webinar for an in-depth breakdown of this gold technical setup and more.

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 last week’s Gold Price Outlook we noted that, “The decline off the June highs looks to have completed a five-wave pattern and suggests a corrective stance on this gold recovery may be appropriate… look for downside exhaustion ahead of 1776 IF the correction interpretation is correct with a breach of the highs shifting the focus towards the upper parallels.” XAU/USD registered a low at 1791 early in the week before turning higher with a breach above the parallel / weekly opening-range fueling a rally of more than 2.3% off the weekly low.

The rally extended into initial resistance today at the 61.8% Fibonacci extension of the late-June advance / 50% retracement of the June decline at 1833- risk for near-term inflection here. The trade remains constructive while above the monthly trendline with critical resistance eyed at 1853/59- a region defined by the 61.8% retracement & the 100% extension and the converges on basic trendline resistance extending off the yearly highs (an area of interest for possible topside exhaustion IF reached).

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 shows XAU/USD continuing to trade within the ascending pitchfork formation identified last week with the upper parallel further highlighting near-term resistance at 1833. Initial support now eyed at 1818 backed by the weekly open at 1808 and the 2012 high at 1795- we’ll reserve this threshold as our near-term bullish invalidation level with a break lower risking resumption towards the 61.8% retracement at 1782. Critical support steady at the 50% retracement / monthly open at 1764/71.

Bottom line: The near-term Gold breakout has now extended into initial technical hurdles at uptrend resistance. A good zone to reduce long-exposure / raise protective stops- losses should be limited to the weekly open IF price is indeed heading higher with a breach / close above 1883 needed to keep the immediate long-bias viable. Ultimately, IF price fails here, a large pullback may offer more favorable entries closer to uptrend support with the broader trade still constructive while above monthly open. 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 Retail Positioning - GC Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +4.70 (82.47% of traders are long) – typically bearishreading
  • Long positions are2.99% higher than yesterday and 0.78% lower from last week
  • Short positions are8.91% lower than yesterday and 6.82% 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.

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Active Technical Setups

- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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

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