Gold prices are trading just above long-term technical support with XAU/USD holding within the weekly opening-range. While the broader outlook remains constructive, the near-term risk remains for another run at the lows with price trading within a bear flag formation off the monthly low. These are the updated targets and invalidation levels that matter on the XAU/USD charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling price setup and more.
Gold Price Chart – XAU/USD Daily
Technical Outlook: In my latest Gold Price Outlook we noted that XAU/USD had, “responded to key support with the recent recovery now targeting the first resistance target at 1472.” Price briefly registered a high at 1478 before pulling back this week with gold holding a tight weekly opening-range just above a long-term key support zone at 1451/61.
The broader gold sell-off has continued to trade within the confines of a descending pitchfork formation extending off the yearly highs. Look for daily resistance at 1479 backed by 61.8% retracement of the monthly decline at 1489. Ultimately a breach / close above the upper parallel would be needed to shift the broader focus back to the long-side. A break below key support at 1451 would risk substantial losses in gold with such a scenario targeting initial support objectives at 1433.
Gold Price Chart – XAU/USD 120min
Notes: A closer look at gold price action shows XAU/USD trading within the confines an ascending channel formation extending of the November 11th low with price testing the lower parallel into the US open. Initial support remains at 1460/61 – IF price is heading higher on this stretch, losses should be limited to this threshold.
Resistance stands just above the weekly opening-range highs at 1479 with a breach there targeting a larger recovery towards the 100% extension at 1485 and the 1489– both areas of interest of possible topside exhaustion IF reached.
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Bottom line: Gold prices are trading just above a critical long-term support zone and the focus is on a break of this week’s range for guidance. From a trading standpoint, the risk remains for another test of the lows here – look to reduce short-exposure / lower protective stops on a stretch lower. Be on the lookout for possible downside exhaustion while above / within 1451/61 targeting a topside breach of this week’s highs. Review my latest Gold Price Weekly 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
- A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.97 (74.81% of traders are long) – bearishreading
- Long positions are0.78% lower than yesterday and 2.87% lower from last week
- Short positions are 4.69% higher than yesterday and 2.86% 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 & compared with last week and therecent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.
See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!
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– Written by Michael Boutros, Currency Strategist with DailyFX
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