Gold Technical Price Outlook: XAU/USD Short-term Trade Levels
Gold prices slumped 0.25% since the start of the week with XAU/USD testing trend support today. This is the last line of defense for the September advance we’re looking for possible inflection off today’s lows for guidance into the close of the week. These are the updated targets and invalidation levels that matter on the XAU/USD short-term technical charts. Review my latest Strategy Webinar for an in-depth breakdown of this gold technical setup and more.
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Gold Price Chart – XAU/USD Daily
Technical Outlook: In my last Gold Short-term Price Outlook we noted that the XAU/USD rally was vulnerable heading into a, “key technical confluence at 1729/34– a region defined by the August 2021 low-day close, the 61.8% Fibonacci retracement of the August decline and the September swing high.” Gold registered a high at 1729 before turning lower with price plunging more than 6.1% off the highs. While a break of the monthly opening-range does shift the focus lower, the decline is responding to confluent trendline support today at the highlighted region around ~1625- the last line of defense.
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Gold Price Chart – XAU/USD 240min
Notes: A closer look at Gold price action shows XAU/USD rebounding off near-term pitchfork support and the focus is on this recovery. Weekly open resistance eyed at 1644 backed by the objective October open 1660. Ultimately a breach / close above 1682/88 would be needed to suggest a larger gold recovery is underway back towards the monthly range highs / key resistance at 1729/34. A break below today’s low would risk resumption of the broader downtrend with such a scenario exposing subsequent support objective at the January 2020 high at 1611, 1600 and the 78.6% retracement of the 2020 range at 1585.
Bottom line: Gold is at the precipice – today’s lows would need to hold IF price is indeed heading higher with a breach above 1688 needed to suggest a more significant low was registered last month. Note that a break below 1611 would likely fuel another accelerated sell-off in price and would put back into focus the broader double-top scenario presented last month. Stay tuned here! 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 +4.95 (83.20% of traders are long) – typically bearish reading
- Long positions are 3.94% higher than yesterday and 15.94% higher from last week
- Short positions are 6.17% lower than yesterday and 21.61% 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.
of clients are net long.
of clients are net short.
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– Written by Michael Boutros, Technical Strategist with DailyFX
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