Technical analysis of XAU-USD
Gold has moved up from its latest retracement so far this week, with price remaining very close to six-year highs. Click on the image to magnify. The fundamental drivers for gold remain somewhat confused, with some dismal data from Europe today standing against recent gains for Asian and American indices on the whole. Overall, it appears that the immediate effects of covid-19 are starting to plateau in more countries. This technical analysis of XAU–USD focusses on the zones that might be important over the next few days.
The most important high resistance is probably the key psychological area of $1,750, which is somewhat above the top of the chart. Low support should probably be sought in the area of about $1,490, the source of the current upward wave. Both of these areas are pretty distant, though, so one would reasonably expect there to be a number of key zones before either might be challenged.
Technical indicators on XAU-USD H4
Moving averages print a very strong buy signal at the time of writing, with all three of the 50, 100 and 200 SMAs successively above each other. The 100 SMA has also extended the space from the 200 this week after having completed a golden cross at the beginning of last week. The clearest support from MAs in the short term is the 100 SMA, from which a fairly strong bounce was observed on Tuesday morning GMT.
The slow stochastic gives a clear indication of overbought, with the main line at 94 only 6 shy of the maximum. Bollinger Bands on the other hand do not currently suggest buying saturation, with more than double the size of the current candle to the upper deviation. Buying volume remains very high compared with the earlier part of April, so one might suggest that the current upward movement is backed by considerable demand.
Price action and Fibonacci
There aren’t many obvious patterns either of candlesticks or the larger chart here. It’s possible that the current period might form upward three soldiers, which would be a strong buy signal in the context, but traders should not act on this until confirmation after the completion of the next period (while being very careful to monitor for overbought). The antepenultimate period’s doji can probably be discounted in the context.
The clearest near-term support from Fibonacci is the 23.6% Fibonacci retracement area. Retracement here has been drawn based on the ongoing main upward wave on the daily charts. One can also observe that the 38.2% retracement functioned as a fairly strong resistance and subsequently support from the second half of March into the first half of this month. A deep retracement here could be halted by this support.
Technical analysis of XAU-USD: summary
More gains for gold over the next few days of trading seem to be favourable. The main concern for buyers here is overbought, though. Many new buyers might want to wait while watching developments in sentiment before committing themselves.