Gold Price Technical Outlook: XAU Pullback to Threaten 2019 Range Low

  • Gold prices hold January range just below slope resistance- key near-term support at 1276
  • Check out our 2019 projections in our Free DailyFX Gold Trading Forecasts
  • Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT

Gold prices broke a multi-week consolidation range last week with the subsequent sell-off defending the January range lows. These are the updated targets and invalidation levels that matter on the XAU/USD charts.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Daily Price Chart (XAU/USD)

Gold Price Technical Outlook: XAU Pullback to Threaten 2019 Range Low

Technical Outlook: In my latest Gold Weekly Technical Outlook we highlighted a pending consolidation break in price while noting that the broader long-bias remains vulnerable while below 1302, “a breach there is needed to mark resumption of the broader uptrend with such a scenario targeting 1321.” Gold broke to the downside with the decline testing the January opening-range lows at 1276 early in the week – a break / close below this level would shift the focus lower heading into the close of the month with such a scenario exposing the 23.6% retracement of the August advance at 1266.

Why does the average trader lose? Avoid these Mistakes in your trading

Gold 120min Price Chart (XAU/USD)

Gold Price Technical Outlook: XAU Pullback to Threaten 2019 Range Low

Notes: A closer look at price action highlights the breakdown with a near-term recovery in price now targeting initial resistance at 1286. Ultimately a breach above the slope confluence around 1293 would be needed to fuel another attempt at 1302. Initial yearly open support rests at 1280 backed by 1276.

Learn how to Trade with Confidence in our Free Trading Guide

Bottom line: The breakdown of a multi-week consolidation structure in Gold does leave the risk lower, but price needs to break the monthly range lows to validate a deeper correction. From a trading standpoint, the near-term focus is lower sub-1293 but we’re looking to fade weakness – ultimately a larger pullback would offer more favorable long-entries targeting a topside break of this multi-year pitchfork resistance.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Gold Trader Sentiment

Gold Price Technical Outlook: XAU Pullback to Threaten 2019 Range Low

  • A summary of IG Client Sentiment shows traders are net-long Gold – the ratio stands at +2.11 (73.0% of traders are long) – bearishreading
  • Long positions are0.6% lower than yesterday and 2.2% lower from last week
  • Short positions are 5.8% higher than yesterday and 22.7% 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 & compared with last week and recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

Active Trade Setups

  • AUD/USD Technical Price Outlook: Aussie Recovery Losing Steam
  • GBP/USD Price Outlook: Pound Testing Key Resistance Amid Brexit Talks
  • EUR/USD Technical Price Outlook: Euro Testing Lower Bounds of Support
  • USD/CAD Price Outlook: Rally Stalls at Critical Resistance Zone

– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex


Please enter your comment!
Please enter your name here