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Gold Price Forecast: XAU/USD Plunge Searches Support

Gold technical forecast: XAU/USD weekly trade levels

  • Gold prices reverse sharply off confluent trend resistance
  • XAU/USD at risk for further short-term losses
  • Gold resistance 1927, 1959, 1988– support 1807/28 (key)

Gold prices plunged from key technical resistance last week and while the broader outlook remains weighted to the topside, the precious metal may be vulnerable to a deeper correction in the days ahead. These are the updated targets and invalidation levels that matter on the XAU/USD weekly technical chart.  We’ll be discussing this gold setup and more in the Weekly Strategy Webinars beginning February 27th!

Gold Price Chart – XAU/USD Weekly

Technical Outlook: Gold prices rallied a staggering 20% off the September/October lows with the advance taking XAU/USD from downtrend support, up into downtrend resistance last week. A massive outside-candle plunged more than 5% off the highs and marks the largest single-week decline since October & the largest weekly range since November. The reversal off confluent resistance now threatens a larger pullback within the broader uptrend and we’re looking for a possible exhaustion-low in the weeks ahead.

Confluent resistance stands with the April 2022 high-week reversal close at 1927 with a breach / weekly close above the 2021 high at 1959 needed to mark resumption of the broader uptrend.

Critical support rests at 1807/28– a region defined by the August swing high, the 52-week moving average, the objective yearly open and the 38.2% retracement of the September advance. We’ll reserve this threshold as our bullish invalidation level and remains an area of interest for possible downside exhaustion / price inflection IF reached.

Gold Price Chart – XAU/USD Weekly (2016 Price Parallel)

Note that a parallel of the late-2016 advance off multi-year lows (pink) suggests a period of consolidation here before a retest of the highs. For context, that instance took 30-weeks before finally peaking for a larger correction – this currently rally off the September lows is on week 19.

Bottom line: Gold prices have reversed off confluent resistance and threatens a deeper correction in the weeks ahead. From a trading standpoint, losses should be limited to 1807/28 IF price is to respect the January breakout. A topside breach of this key resistance threshold would expose subsequent objectives towards the record highs. I’ll publish an updated Gold short-term technical outlook once we get further clarity on the near-term technical trade levels.
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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