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Gold Technical Outlook: Gold Gut Check- XAU/USD Bulls Eye Support

Gold Technical Outlook: Gold Gut Check- XAU/USD Bulls Eye Support

Michael Boutros, Strategist

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

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Gold prices are back on the defensive this week with XAU/USD threatening an outside-weekly reversal from multi-week highs- ominous for the bulls. The losses are set to snap a two-week winning streak and the focus is on possible price inflection into monthly-open support here in the days ahead. 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 my last Gold Price Outlook we noted that gold was approaching resistance at the 2021 high at 1959 and that, “Ultimately a breach through the median-line would be needed to mount an assault on key resistance at the March 9th reversal-close / 61.8% retracement of the March range at 1991-2001.” A topside breach on April 12th fueled a rally of more than 2.2% with gold registering a high at 1998 before turning sharply lower. Threat for an outside-weekly reversal off the highs- is a near-term exhaustion high in place? Watch the close.

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 breaking below uptrend support (blue) this week with the decline carving out a tight descending channel formation. The immediate focus is on confluence support objectives here at 61.8% Fibonacci retracement / April open at 1931/37 and the 2021 high-day close at 1918- looking for a low ahead of this threshold to keep the late-March rally viable in the days ahead. Note that weakness below this threshold would be technically damaging to the broader uptrend with such a scenario threatening a plunge towards 1891 & 1877. Initial resistance now back at 1959 with near-term bearish invalidation lowered to the objective weekly open at 1973-rallies should be limited by this threshold IF price is moving lower on this stretch.

Bottom line: The gold reversal takes price back into meaningful technical support and the focus is on possible price inflection down here. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – look for a larger reaction on a stretch towards 1918 IF reached for guidance. Ultimately, a breach / close above 1973 would be needed to mark resumption back towards the median-line. 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 +3.17 (76.03% of traders are long) – typically bearishreading
  • Long positions are1.71% lower than yesterday and 0.27% higher from last week
  • Short positions are6.98% higher than yesterday and 16.57% lower 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 less net-long than yesterday but more 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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