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

Gold prices plunged more than 2% since the start of the week with XAU/USD reversing off yearly downtrend resistance. The pullback is now approaching the August range lows and we’re on breakout watch for guidance into the close of the month. These are the updated targets and invalidation levels that matter on the XAU/USD short-term 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 Short-term Trade Outlook - GC Technical Forecast

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

Technical Outlook: In my last Gold Short-term Price Outlook we noted that the XAU/USD, “rebound off downtrend support is holding just below downtrend resistance with the weekly / monthly opening-range in focus- we’re looking for possible price inflection here.” Gold briefly registered a high at 1807 the following day before pulling back with price plunging lower into the start of the week. The August range is preserved with daily support eyed at the objective monthly open / December low at 1752/53– risk for inflection into this zone.

Gold Price Chart – XAU/USD 240min

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

Notes: A closer look at Gold price action shows XAU/USD continuing to trade within the confines of the embedded ascending pitchfork formation we’ve been tracking off the July lows. A break below the median-line today takes price towards support at the 1752/59 backed by the lower parallel (currently ~1740s)- both zones of interest for possible downside exhaustion / price inflection IF reached. Ultimately, a break / close below the 61.8% retracement / August low-day close at 1729 would be needed to mark resumption of the broader downtrend back towards 1671/82. Initial resistance eyed at 1791 backed by the objective weekly open at 1802. Critical resistance steady at 1818/27 with a breach / close above needed to suggest a larger trend reversal is underway in Gold.

Bottom line: Gold prices have turned from downtrend resistance and the focus remains on a breakout of a well-defined monthly opening-range for guidance. Form a trading standpoint, look to reduce short-exposure / lower protective stops on a drop into 1752- losses should be limited by the lower parallel IF price is indeed heading higher. Keep in mind, losses sub-1729 would be technical damaging and could fuel another accelerated decline in XAU/USD- stay nimble here. 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 +3.16 (75.97% of traders are long) – typically bearishreading
  • Long positions are1.35% higher than yesterday and 0.34% higher from last week
  • Short positions are0.98% lower than yesterday and 10.29% 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 more net-long than yesterday but less net-long from last week and 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

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