Since August this year, the price of gold remains within the descending channel. In December, there was a clean bounce off the 50 Exponential Moving average, along with the 78.6% Fibonacci retracement level at 1895. After this bounce price went down sharply and declined towards the previously formed resistance at 1764. Now, this level became a strong demand area, where price might return once again.
This is because the top of the descending channel has been rejected today and the 200 Simple Moving Average got broken. Currently, the price of gold is at the level where previously 50 EMA got rejected. This makes an area between 1895 - 1907 the key resistance zone. As long as it is respected, sellers will remain in control. The most probable scenario is the decline towards the 1764 support, where XAU/USD might produce the double bottom before/if the long term uptrend continues.
The current pullback up could have been an ABC correction, which might result in the final and 5th wave down. Nonetheless, daily break and close above the recently produce high at 1907 will invalidate a bearish outlook and in this case, XAU/USD should continue to rise. After the breakout, the price might produce a small upside wave, after which it will correct down towards the 78.6% Fibs at 1880. This is the level where the upper trendline of the channel is likely to act as the support, and it could be the starting point of the uptrend continuation. This upside move can send the price of gold towards the nearest psychological level at 2100, which will be a new all-time high.
Key support levels: 1818, 1762
Key resistance levels: 1895, 1907
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Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This is because the top of the descending channel has been rejected today and the 200 Simple Moving Average got broken. Currently, the price of gold is at the level where previously 50 EMA got rejected. This makes an area between 1895 - 1907 the key resistance zone. As long as it is respected, sellers will remain in control. The most probable scenario is the decline towards the 1764 support, where XAU/USD might produce the double bottom before/if the long term uptrend continues.
The current pullback up could have been an ABC correction, which might result in the final and 5th wave down. Nonetheless, daily break and close above the recently produce high at 1907 will invalidate a bearish outlook and in this case, XAU/USD should continue to rise. After the breakout, the price might produce a small upside wave, after which it will correct down towards the 78.6% Fibs at 1880. This is the level where the upper trendline of the channel is likely to act as the support, and it could be the starting point of the uptrend continuation. This upside move can send the price of gold towards the nearest psychological level at 2100, which will be a new all-time high.
Key support levels: 1818, 1762
Key resistance levels: 1895, 1907
Thanks for your support! If you liked this analysis, please support our profile with a 👍 and follow us to get a new daily analysis.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.