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Gold Price Technical Outlook: Gold Bear Market Bounce? XAU/USD Levels

Gold Price Technical Outlook: Gold Bear Market Bounce? XAU/USD Levels

Michael Boutros, Strategist

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

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Gold prices are attempting to snap a four-week sell-off with XAU/USD rebounding off technical downtrend support yesterday. The recovery may be short-lived and the immediate focus is on the weekly opening-range taking shape just above trend extremes. 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 the XAU/USD was in search of a low and to look, “for evidence of an exhaustion low with either a drop into 1818/27 OR a rally through 1897 needed to offer new entry opportunities.” Gold drilled through key support before rebounding sharply off the lower parallel / 2022 low-week close at 1791- that recovery has now taken price back into former support (now resistance) and the focus is on a breakout of the weekly opening-range for guidance.

A topside breach from here would shift the focus towards the 2021 high-week close / 23.6% Fibonacci retracement of the March decline at 1849/53- note that the median-line converges on this threshold over the next few days and a breach / daily close above would be needed to suggest a larger recovery is underway towards 1895/97 and key resistance at 1918 (both areas of interest for possible topside exhaustion IF reached).

Gold Price Chart - XAU/USD 240min

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

Notes: A closer look at Gold price action shows XAU/USD rebounding off the lower parallel with precision with the rally faltering today into 1827. Initial support steady at 1791 – a break below this threshold would threaten another accelerated decline in gold with such a scenario exposing subsequent support objectives at the November lows at 1758 and the August low-day close at 1729- look for a larger reaction in price there IF reached.

Bottom line: The gold plunge has rebounded off downtrend support and threatens a recovery within the broader decline. From a trading standpoint, a good region to reduce portions of short-exposure / lower protective stops – rallies should be capped by the median-line IF price is heading lower on this stretch with a close below 1791 needed to mark resumption of the broader downtrend. For now- look for a break of the weekly opening-range for guidance. 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 Forecast
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +5.63 (84.93% of traders are long) – typically bearishreading
  • Long positions are3.91% higher than yesterday and 1.31% higher from last week
  • Short positions are4.77% higher than yesterday and 10.12% 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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- 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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