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Gold Technical Forecast: Gold Breakout Reaches for Resistance

Gold Technical Forecast: Gold Breakout Reaches for Resistance

Michael Boutros, Strategist

Gold Technical Price Forecast: XAU/USD Weekly Trade Levels

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Gold prices are attempting to mark a fourth consecutive weekly rally with the XAU/USD breakout now probing a critical region of technical resistance near the 2021 highs. While our broader outlook remains constructive, the rally may be vulnerable to near-term exhaustion within the broader uptrend. These are the updated targets and invalidation levels that matter on the XAU/USD weekly technical chart. Review my latest Weekly Strategy Webinarfor an in-depth breakdown of this gold technical setup and more.

Gold Price Chart - XAU/USD Weekly

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

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

Notes: In my last Gold Weekly PriceOutlook we noted that XAU/USD, “continues to contract within the 2021 consolidation pattern and the focus is on a breakout in the weeks ahead. From a trading standpoint, we’re on the lookout for an exhaustion low ahead of the lower parallel IF price is indeed heading higher with a close above 1843 needed to suggest a more significant low is in place.” That ended up being the low with a breakout of the yearly consolidation pattern the following week fueling a rally of more than 7.5% off the January lows. The rally has now extended into a key resistance zone noted last month, “the 2021 high close / 61.8% retracement of the 2020 decline at 1903/23.” Today’s high registered at 1914 before reversing- is a near-term high in place?

We’re looking for possible price inflection up here with the immediate advance vulnerable while below Fibonacci resistance. Initial weekly support rests at 2021 high-week close at 1849- losses should be limited to this threshold IF price is indeed heading higher on this stretch with a weekly close above 1923 needed to clear the way for a run towards the 2021 swing high at 1959 and the record high-week close at 2034. Broader bullish invalidation now raised to the yearly low-week close at 1791.

Bottom line: The gold price breakout has extended into uptrend resistance and the immediate advance may be vulnerable in the days ahead. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to the 2021 trendline (former resistance, now support) with a weekly close above needed to mark resumption of the broader uptrend. Keep in mind the US Personal Consummation Expenditure (PCE) is slated for Friday with and could spur significant volatility here- stay nimble and be on the lookout for signs of an exhaustion low. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trade 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 Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +1.89 (65.42% of traders are long) – typically bearishreading
  • Long positions are4.33% higher than yesterday and 8.45% higher from last week
  • Short positions are 5.57% lower than yesterday and 22.58% 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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Economic Calendar

Economic Calendar - Key Gold Data Releases - US Core Inflation - PCE

Previous Weekly Technical Charts

- 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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