After gold hit historical values last week, we can prepare for a bearish correction. According to the COT Data it still has strong contract sizes, but the current momentum is weaker that the one from previous weeks.
From a technical and a COT perspective there are 2 possible scenarios for XAU /USD:
1. A correction towards the 0.236 Fibonacci level. It aligns with the monthly critical demand area near 1830.000. After reaching it, price rejects it and makes another top around the daily critical supply zone near 2070.000.
2. Price breaks below the 1830.000 zone and move towards the 0.618 Fibonacci level. It matches perfectly with the monthly critical demand zone at the 1500.000 mark. This scenario will take place for sure. The question is when? The answer depends on how long it will take for the USD to recover.
Yellow zone - critical supply/demand area based on the weekly timeframe
Red zone - critical supply/demand area based on the daily timeframe
Happy Trading!
From a technical and a COT perspective there are 2 possible scenarios for XAU /USD:
1. A correction towards the 0.236 Fibonacci level. It aligns with the monthly critical demand area near 1830.000. After reaching it, price rejects it and makes another top around the daily critical supply zone near 2070.000.
2. Price breaks below the 1830.000 zone and move towards the 0.618 Fibonacci level. It matches perfectly with the monthly critical demand zone at the 1500.000 mark. This scenario will take place for sure. The question is when? The answer depends on how long it will take for the USD to recover.
Yellow zone - critical supply/demand area based on the weekly timeframe
Red zone - critical supply/demand area based on the daily timeframe
Happy Trading!