Gold Technical Price Outlook: XAU/USD Near-term Trade Levels
Gold prices surged into the yearly highs today with XAU/USD up more than 1.4% this week. The breakout needs to close above the May highs to keep the advance viable and we’re looking for a reaction here today. These are the updated targets and invalidation levels that matter on the XAU/USD technical charts in the days ahead. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold trade setup and more.
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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 the XAU/USD rally was approaching, “confluence resistance at 1731– a level defined by the a objective June open and the yearly high-day close. Ultimately, a breach / close above the yearly high-close at 1747 would be needed to mark resumption of the broader uptrend.” Price broke above this threshold on Monday with a test of that same level as support today fueling a rally back into the May high at 1765– watch the close today. A topside breach keeps the focus on the 2012 high at 1795 backed by the 88.6% Fibonacci retracement of the decline off the record high at 1820. Key support / bullish invalidation now raised to 1731.
Gold Price Chart – XAU/USD 120min
Notes: A closer look at Gold price action sees XAU/USD trading within the confines of an ascending pitchfork formation with the advance testing confluence resistance today at 1765- look for a reaction here. Initial support now back at 1745/47 backed by 1731– a level of interest for possible downside exhaustion IF reached. A breach higher keeps the focus on the upper parallel (currently ~1780s) and 1795.
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Bottom line: The gold breakout is probing fresh yearly highs and a close above 1765 is needed to keep the immediate long-bias viable. From a trading standpoint, a good spot to raise protective stops – look for a reaction here today. Losses should be limited to the monthly open IF prices are indeed heading higher.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 +1.93 (65.83% of traders are long) – bearishreading
- Long positions are2.36% higher than yesterday and 9.08% higher from last week
- Short positions are 5.94% higher than yesterday and 20.78% 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 and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.
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of clients are net long. of clients are net short.
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– Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex