Breakout Stalls – XUA/USD Coils Below Resistance

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Gold prices are slightly lower this week with the precious metal down 0.3% ahead of the New York close on Friday. Although the broader focus is higher, GLD remains vulnerable near-term while below a major uptrend resistance. These are the updated targets and invalidation levels that matter on the Gold (XAU/USD) weekly price chart heading into the close of the month. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.

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Gold Price Chart – XAU/USD Weekly

Gold Price Chart - XAU/USD Weekly - GLD Technical Outlook

Notes: In my last Gold Weekly PriceOutlook we noted that XAU/USD was, “in a multi-week consolidation pattern just below resistance- look to the break for guidance. From a trading standpoint, the risk remains for a move lower before resumption of the broader uptrend.” Nearly two weeks later and Gold has continued to drift with the broader long-bias still at risk into the close of the month.

Initial weekly support rests at 1380 and the 2016 high-day close at 1366 with broader bullish invalidation 1350. Topside resistance objectives unchanged with a breach / close above 1433 exposing subsequent resistance targets at the 100% extension at 1451 and the 50% retracement of the decline off the record highs at 1483.

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Bottom line: While the broader outlook remains weighted to the topside, Gold prices remain vulnerable for further weakness near-term after reversing off longer-term resistance targets last week at 1451. From a trading standpoint, looking for a deeper correction in the medium-term to ultimately offer more favorable long-entries closer to trend support. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trading levels.

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Gold Trader Sentiment (XAU/USD)

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

  • A summary of IG Client Sentiment shows traders are net-long Gold – the ratio stands at +2.46 (71.1% of traders are long) – bearish reading
  • Long positions are 0.3% higher than yesterday and 19.2% higher from last week
  • Short positions are 0.7% lower than yesterday and 16.2% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger Spot Gold-bearish contrarian trading bias from a sentiment standpoint.

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

Previous Weekly Technical Charts

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— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex



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