Gold Technical Price Outlook: XAU/USD Near-term Trade Levels
Gold prices are virtually unchanged for the week with XAU/USD holding a critical range just below key resistance. The focus is on a breakout in the days ahead with the outlook weighted to the topside while above 1800. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into the close of the week. Review my latest Strategy Webinar for an in-depth breakdown of this gold technical setup and more.
Gold Price Chart – XAU/USD Daily
Chart Prepared by Michael Boutros, Technical Strategist; Gold on Tradingview
Technical Outlook: In my last Gold Prices Outlook we noted that the focus was on a, “breakout of the January range for direction. From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch towards 1829 – pullbacks should be limited to the weekly open (1796) IF price is heading higher on this stretch.” XAU/USD registered a high precisely at 1829 last week before pulling back with the price registering a low today at 1805 – so was that the pullback? Note that the January opening-range remains intact and keeps a the focus on a breakout in the days ahead for guidance.
Gold Price Chart – XAU/USD 240min
Notes: A closer look at Gold price action shows XAU/USD continuing to trade within the confines of an ascending pitchfork formation extending off the November / December low. Initial support and near-term bullish invalidation not raised to the 61.8% Fibonacci retracement of the monthly range / the lower parallel at 1800– losses should be limited to this region IF price is indeed heading higher on this stretch. A topside breach / close above the July high-day close / 61.8% retracement / 2022 yearly open at 1829 is needed to mark resumption of the broader uptrend with such a scenario exposing subsequent resistance objectives at the median-line (currently ~1840) and the 2021 high-week close at 1849– look for a larger reaction there IF reached.
Bottom line: Gold reversed off resistance at the range highs last week and the focus is on this pullback. From at trading standpoint, look for a low ahead of 1800 this week with a close above 1829 still needed to keep the bullish bias viable in the days ahead. Stay nimble here- a break below this formation would likely fuel another accelerated bout of losses towards the monthly range lows at 1783. 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
- A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.33 (70.01% of traders are long) – typically bearishreading
- Long positions are 0.85% higher than yesterday and 6.38% lower from last week
- Short positions are 6.92% lower than yesterday and 10.36% 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 further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.
Active Technical Setups
– Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex