Gold Price Technical Prediction: Gold Collapse Underway – Big P…
(MENAFN-DailyFX) Gold Price Technical Prediction: Weekly XAU/USD Trading Levels
- Gold Price Updated Trading Levels – Weekly Technical Chart
- XAU/USD 5-week decline breaks multi-year uptrend with initial support targets in sight
- New to gold trading? Get started with this free How to Trade Gold beginner’s guide
Gold prices fell more than 18% from yearly highs, with XAU/USD slumping on key technical support last week. A five-week sell-off puts the yellow metal within striking distance of 2021 lows, and while the broader risk is now shifting to the downside, the immediate decline could be vulnerable to some lower support ahead of next week’s Federal Reserve rate decision are the updated targets and invalidation levels of significance on the XAU/USD weekly technical price chart. Watch my latest weekly strategy webinar for a detailed breakdown of this gold technical setup and more.
Gold Price Chart – XAU/USD Weekly
Diagram created by Michael Boutros, Technical Strategist; Gold on trading view
Notes: In my recent Gold Weekly PriceOutlook, we noted that XAU/USD is “testing a crucial level at multi-year trendline support, the last line of defense for the 2018 uptrend – looking for a reversal here.” A clear and well-defined break/close below confluence support at the 2021 weekly low at 1729 triggered further price action lower and threatens steeper losses in the coming weeks.
The next key support level is at the May and June 2020 lows / 38.2% Fibonacci retracement of the 2015 rally at 1671/82. This zone will converge towards channel support over the next few weeks – and look for a possible price reversal there IF it is reached. A break below this level would likely fuel another phase of accelerated losses for gold, with such a scenario exposing the March 2020 weekly reversal close at 1631. Weekly close at 1791. Broader bearish invalidation now lowered to 100% extension / 61.8% retracement / 52 week moving average 1818/31.
Conclusion: Gold has tumbled through key uptrend support and remains vulnerable to further declines while trading below the 2018/2019 trend line. From a trading perspective, try to reduce short exposure/lower protective stops on a stretch towards 1671/82 – rallies/rebounds should be limited to 1791 if the price turns down that stretch. Keep in mind that both price and sentiment are reaching extremes here to support the downtrend as the FOMC rate decision looms next week. A good time to reduce position size and remain flexible – things could get very interesting here at the Fed. . . Check out my latest Gold Price Outlook for a closer look at near-term XAU/USD technical trading levels.
For a full breakdown of Michael’s trading strategy, see his Fundamentals of Technical Analysis series on building a trading strategy
Gold Traders Sentiment – XAU/USD price chart
- A summary of IG client sentiment shows that traders are net long gold – the ratio is +7.02 (87.53% of traders are long) – typically bearish
- Long positions are 4.05% higher than yesterday and 7.37% higher than last week
- Short positions are 5.31% higher than yesterday and 20.49% lower than last week
- We typically view crowd sentiment as contrarian and the fact that traders are net long suggests gold prices could fall further. Traders are less net long than yesterday but more net long since last week. The combination of current positioning and recent changes gives us another mixed bias on gold trading from a sentiment perspective.
Active weekly technical charts
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– Written by Michael Boutros, Technical Strategist at DailyFX
Follow Michael on Twitter @MBForex
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