XAU/USD and XAG/USD trend reversal imminent?

Gold, XAU/USD, Silver, XAG/USD – Technical Outlook:

  • Gold continues to flirt with key technical support.
  • Silver has consolidated after a decent rally this month.
  • What is the outlook and what are the key levels to watch for a trend reversal?

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The lack of further price action in spot gold after last week’s break below the key horizontal trendline support at 1676 (which coincides with the 200 week moving average) raises some doubts about the reliability of the bearish signal. However, stalling after the break alone is not enough to infer a wrong move – it could well indicate a delay. While the yellow metal holds below 1676, the subsequent decline could come next week or in due course.

For a false break to occur, as silver did recently (see chart), gold must at least break above the 1698 September 15 high – an outside opportunity highlighted last week. This has never happened even on an intraday basis. Therefore, the short-term outlook for gold remains bearish. A rise above 1698 could open the way to the 1735 September 12 high.

From the overall perspective, a decisive break (at least two weekly closes) below 1676 would trigger a double top pattern (the 2020 and 2022 highs), suggesting a possible pullback towards the 200-month moving average (now at around 1292). indicates ). There is quite strong support at 1620 (the 50% retracement of the 2018-2020 surge), followed by 1510 (the 61.8% retracement).

XAU/USD & XAG/USD daily chart

Chart created with TradingView


Silver’s overall neutral bias from last week remains unchanged. As noted, the multi-month slide on higher timeframe charts has lost steam, raising the prospect of sideways conditions in the meantime. From a few weeks perspective, 5.50-9pm is a potential range notwithstanding this week’s sideways price action giving the impression of an even tighter congestion zone.

After the strong rally earlier this month, silver has consolidated below key resistance at the 20.00 psychological and technical level (which includes the 12th September high). It is crucial for silver to break this resistance if the overall recovery structure has any legs since the beginning of the month. Such a break could open the way towards 21.00 (the August high, which roughly coincides with the 200-week moving average).

To the downside, a decisive break below 18.76 16th September low would suggest this month’s rally has been an absolute pullback, raising the prospect of a retest of 17.53 1st September low. Additionally, a decisive break below 17.53 would be a sign that silver has resumed its medium-term downtrend.

XAG/USD 3 hour chart

XAG/USD 3 hour chart

Chart created with TradingView

— Written by Manic Jaradi, strategist for DailyFX.com

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