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Gold Price Technical Outlook: Gold Goes to 1830- Break or Bounce?

Gold Price Technical Outlook: Gold Goes to 1830- Break or Bounce?

Michael Boutros, Strategist

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

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Gold prices surged more than 2.6% off the January low with XAU/USD recovery approaching a key pivot zone ahead of US CPI this week. The focus is on possible price inflection into this threshold with the broader outlook still weighted to the topside while above the monthly open. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into key US inflation data this week. 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 my last Gold Prices Outlook we noted that the XAU/USD breakout had reversed off confluent resistance around the 2021 high-week close at 1849, “We’re getting a bit of a pivot here and we’re on the lookout for possible downside exhaustion on this pullback.” Well, the pullback drove deeper than anticipated with Gold plunging nearly 4% into confluent support at 1791- this low must hold this week for the broader uptrend to remain intact.

Gold Price Chart - XAU/USD 240min

Gold Price Chart - XAU/USD 240min - GLD Trade Outloook - GC Technical Forecast

Notes: A closer look at Gold price action shows XAU/USD continuing to trade within the confines of the ascending pitchfork formation extending off the November / December low. Note that the median-line now converges at a key pivot zone at the 61.8% Fibonacci retracement of the December range, the 61.8% retracement of the November decline and the July high-day close at 1825/30- look for a reaction here.

A topside breach exposes the 2021 trendline (red, currently ~1840s) backed by key resistance at the 2021 high-week close / 78.6% retracement at 1849/50- a daily close above this threshold is needed to suggest a larger breakout is underway with such a scenario eyeing the November highs / 100% ext of the August advance at 1877. Weekly open support rests at 1807 backed closely by the February open at 1797 and near-term bullish invalidation at 1791- both areas of interest for possible downside exhaustion IF reached.

Bottom line: A recovery off uptrend support takes the immediate Gold rally back into uptrend resistance and we’re looking for possible price inflection up here. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops – losses should be limited to the lower parallel IF price is heading higher with a breach / close above 1850 needed to fuel the next leg upward in price. Ultimately a break of the monthly range lows could prove terminal for the bulls with such a scenario challenging the entire August uptrend. The stage is set for US CPI data on Thursday- stay nimble. 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 +2.95 (74.66% of traders are long) – typically bearishreading
  • Long positions are5.56% lower than yesterday and 15.39% lower from last week
  • Short positions are25.62% higher than yesterday and 47.16% 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

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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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