Gold Collapses- Relief in Sight?

Gold Technical Price Outlook: XAU/USD Near-term Trade Levels

Gold prices have collapsed more than 4% off the weekly high with XAU/USD now testing the first majors support zone of interest. The decline constitutes a break of the monthly opening-range and while the threat remains lower, the sell-off is may be vulnerable here at confluence downtrend support.

These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into the close of a volatile week. 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

Gold Price Chart - XAU/USD Daily - GLD Trade Outlook - GC Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; Gold on Tradingview

Technical Outlook: In last week’s Gold Price Outlook we noted that the XAU/USD recovery remained vulnerable while below 1900 and to look for a reaction at key support at, “the 38.2% Fibonacci retracement of the yearly range / September low at 1837/48 with a break there exposing more a significant technical confluence at the 2012 high / 100% extension at 1790/1803– an region of interest for possible downside exhaustion IF reached.” Gold prices broke below lower early in the week with a decline of more than 3.5% now testing this key support zone – we’re looking for a near-term pivot here.

A break / close below 1790 is needed to keep the immediate short-bias viable with such a scenario exposing the 50% retracement at 1764 and critical support at the lower parallel / 100% extension at 1739. Daily resistance now back at 1848 with bearish invalidation lowered to the November monthly open at 1879.

Gold Price Chart – XAU/USD 120min

Gold Price Chart - XAU/USD 120min - GLD Trade Outlook - GC Technical Forecast

Notes: A closer look at Gold price action shows XAU/USD trading within the confines an embedded near-term descending pitchfork formation with the decline testing confluence support today at the lower parallel / 100% extension at 1803 – the immediate decline may be vulnerable while above this threshold but the threat remains lower while below the median-line / 1836. A break lower keeps the focus on 1784/90 backed by 1764 and 1739.

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Gold Forecast

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Bottom line: A break of the November opening-range low keeps the focus lower in gold prices – that said, the decline is now testing the initial key support objectives. From at trading standpoint, a good zone to reduce short-exposure / lower protective stops- be on the lookout for topside exhaustion ahead of 1836 on recoveries IF price is heading lower. Ultimately, we’re on the lookout for a low heading into the close of the month with December typically a supportive month for Gold prices. 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

Gold Trader Sentiment - XAU/USD Price Chart - GLD Trade Outlook - GC Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.69 (78.69% of traders are long) – bearishreading
  • Long positions are9.71% lower than yesterday and 1.34% lower from last week
  • Short positions are 14.64% higher than yesterday and 5.88% 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

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 5% 8% 5%
Weekly 10% -6% 6%

Active Technical Setups

– Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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