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Gold Price Collapse Testing Critical Support

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Gold Technical Price Forecast:XAU/USD Weekly Trade Levels

Gold prices are set to close out a fourth consecutive weekly decline with XAU/USD collapsing nearly 10% off the April highs. The bears are testing a major support zone here which IF broken, could unleash another leg lower in the yellow metal. These are the updated targets and invalidation levels that matter on the XAU/USD weekly price chart. Review my latest Weekly Strategy Webinarfor an in-depth breakdown of thisgold technical setup and more.

Gold Price Chart – XAU/USD Weekly

Gold Technical Forecast: Gold Price Collapse Testing Critical Support

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

Notes: In my last Gold Weekly PriceOutlook we noted that a break below confluent support at 1849 kept, “the focus on a drive into 1818/28– looking for a larger reaction there IF reached.” Price is probing this threshold ahead of the close and the focus remains on possible price inflection here at the 100% extension of the yearly decline / 61.8% Fibonacci retracement of the 20221 rally.

Initial weekly resistance now at 1849 backed by the 2020 high-close at 1903. Broader bearish invalidation now lowered to the April high-week reversal close at 1926. Ultimately, a break below the yearly low-week close at 1791 is needed to fuel another leg lower for gold with such a scenario exposing the 2021 low-week close at 1729 note that the 2018/2019 trendline converges on this threshold over the next few weeks and represents the last uptrend support slope for gold.

Bottom line: The gold price collapse is now probing a major technical confluence at uptrend support. This is a critical zone which IF broken could see another bout of accelerated losses- looking for a reaction here. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops. Rallies should be capped by 1849 IF price is heading lower. Ultimately, we’re on the lookout for signs of an exhaustion low in the weeks ahead. Review my latest Gold Price Outlook for a closer look at the near-term XAU/USD technical trade 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 Technical Forecast: Gold Price Collapse Testing Critical Support

  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +5.65 (84.95% of traders are long) – typically bearishreading
  • Long positions are4.26% higher than yesterday and 0.92% higher from last week
  • Short positions are 18.68% lower than yesterday and 12.75% 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.

Previous Weekly Technical Charts

– Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex



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