Technical analysis of XAU-USD
Gold-dollar (XAU–USD) has retreated somewhat from recent highs yesterday morning GMT. The spread of the coronavirus outside China and a degree of nervousness in stock markets have been key fundamental factors driving the movement upward in the second half of February.
High resistance here is the latest high around $1689 reached yesterday morning GMT. Low support could occur around $1555, the starting point for this latest upward wave. However, there’s likely to be a number of important supports before this fairly distant price might be reached.
Technical indicators on XAU-USD H4
Moving averages in their usual combination of 50, 100 and 200 indicate a strong buy signal. All three MAs remain successively above each other and the 50 SMA completed a golden cross of the 100 last week. The first important support from MAs is likely to be approximately $1612, the area of the 50 SMA from Bands.
Bollinger Bands (50, 0, 2) no longer indicate overbought because price has now moved back inside the upper deviation. The slow stochastic (15, 5, 5) also does not suggest saturation, with both the main and signal lines moving much closer to neutral over the last few periods. Volume meanwhile has increased fairly steadily since late last week, suggesting that a continuation is possible.
Price action and Fibonacci
Recent price action is fairly consistent with a consolidation after a runaway upward movement. After the 15th successive close outside the upper deviation of Bands, there was a large down candle retreating from this overbought zone. There seems to be little impetus for an immediate resumption of gains based on the gravestone doi last night GMT.
The 38.2% area of the Fibonacci could be an important zone of support which was tested in the previous period. Below this, one would typically expect the 50% area to be quite a strong support from which a bounce might occur.
Key fundamental events
The most important regular data this week for gold come from the USA. Thursday’s Q4 GDP growth, durable goods orders (January) and initial jobless claims could give some support to XAU–USD if they’re weaker than expected.
Technical analysis XAU-USD: summary
From a technical perspective, gold’s gains seem to be likely to continue after a period of consolidation. The question remains how deep this consolidation might be. A move back to the 50% area of the Fibonacci fan followed by a rebound upward might provide an opportunity for entry on this timeframe. However, traders should watch carefully for saturation from both Bands and the stochastic.
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