Gold Technical Price Outlook: XAU/USD Near-term Trade Levels
Gold prices are up just over 1% despite a weekly range of over 2.2% as markets digest the results of the US Presidential Election. The recovery takes XAU/USD back into multi-month trend resistance and we’re looking for inflection up here for guidance. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into the close of a volatile 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 Price Outlook we noted that XAU/USD was, “consolidating within the October opening-range just below multi-month downtrend resistance.” Our focus was on confluence resistance near “the 2011 high / October high-day close at 1920/22 with a breach / close above 1935 needed to mark resumption.” Price registered a high at 1931 one week later before reversing sharply with the September low-day close at 1867 catching the decline into the close of the month.
That recovery is now once again testing multi-month downtrend resistance on the heels of last night’s US Presidential Elections. Look for a reaction off this trendline with a breach / close above 1935 still needed to validate a breakout of the September downtrend towards 1988/92. Daily support at 1879 backed by 1867– weakness beyond this threshold would be needed to mark resumption of the August decline.
Gold Price Chart – XAU/USD 120min
Notes: A closer look at Gold price action shows XAU/USD continuing to trade within the confines a descending pitchfork formation extending off the late-August decline with the weekly opening-range taking shape just below trend resistance. Initial support steady at 1881/84 with a close below 1867 needed fuel the next leg lower in price towards 1849 and the 38.2% Fibonacci retracement at 1837.
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Bottom line: Gold prices are in a near-term consolidation just below downtrend resistance and we’re looking for a near-term breakout for guidance. From a trading standpoint, the risk remains for a deeper correction while below 1920 with a break below the September lows needed to fuel the next leg lower in price. Ultimately, a larger setback may offer more favorable opportunities closer to broader uptrend support. Keep in mind we still have the FOMC interest rate decision and US Non-Farm Payroll (NFP) on tap into the close of the week. 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 +4.27 (80.01% of traders are long) – bearishreading
- Long positions are6.44% lower than yesterday and 11.13% lower from last week
- Short positions are 7.94% lower than yesterday and 11.23% 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.
| Change in | Longs | Shorts | OI |
| Daily | -4% | -10% | -5% |
| Weekly | -11% | 2% | -9% |
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– Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
