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GOLD : Reversal ?

(12 August 2020). XAU/USD risk for larger correction while below 2034- key support 1876. Gold prices have plummeted more than 6% off fresh record highs with XAU/USD breaking below the August open today. The sell-off threatens a larger reversal in the days ahead but keeps prices within the confines of the broader yearly advance.

 

GOLD PRICE CHART - XAU/USD DAILY

XAU/USD had, “extended into a zone that could interrupt the immediate advance at uptrend resistance– that said the focus is higher while above the median-line.” The rally continued to rip higher unabated in the following days with price pulling back just one day out of fifteen. The advance marked a massive red flag on Friday however with an outside-day reversal off fresh record high- just ahead of broader uptrend resistance.

The sell-off is poised to mark a third consecutive day with the decline now attempting to break below confluence support at the median-line / 1984. Subsequent daily support eyed at the 2011 swing high / 23.6% Fibonacci retracement of the yearly range at 1920/27 with broader bullish invalidation now raised to the 2011 high-day close at 1876.

Notes: A closer look at Gold price action sees XAU/USD breaking below near-term channel support (red) early in the week with the decline now attempting to validate a break of the monthly opening-range lows at 1960. Initial resistance now stands back at the August open / Fibonacci confluence at 1974/84 with a breach above weekly-open resistance at 2035 needed to mark resumption of the broader uptrend towards the high close at 2066 and the 1.382% extension at 2105.

Bottom line: Gold prices remain at risk on the back of this recent stretch to record highs for a larger correction within the confines of the broader uptrend. From a trading standpoint, be on the lookout for possible downside exhaustion into the lower parallel / ahead of 1876 IF the broader long-bias is to remain viable. Ultimately a larger pullback may offer more favorable entries closer to trend support with a breach above this week’s open needed to fuel the next leg higher in price. Review my latest Gold Weekly Price Outlook for a closer look at the longer-term XAU/USD technical trading levels.

 

 


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