Technical analysis of XAUUSD
Gold has moved back up this week to retest areas around $2,010. The dollar has generally steadied to at least some extent against most currencies this week, while earlier today British inflation came in at 1%, a four-month high. Traders are looking ahead today to the release of the Fed’s latest minutes. Thank you Xolile Mnisi for requesting this technical analysis of XAUUSD!
High resistance here is $2,073, the latest all-time high, while this week’s high around $2,013 could also be important in the short term as a barrier to upward movement. Low support meanwhile on this timeframe is around $1,970, last week’s low. Areas from moving averages could also be important as supports into the end of the week.
Technical indicators on XAUUSD H4
The buy signal from moving averages has weakened now that the 50 SMA from Bands has completed a death cross of the 100. Having said that, price remains above all three of the 50, 100 and 200 SMAs at the time of writing. The main zone of support from moving averages in the medium term is the 200 SMA near the latest weekly low.
Gold is not currently overbought based on either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5); however, the latter at 79 is very close to the zone of buying saturation. Volume of buying also remains fairly high compared to the average in July overall.
Price action and Fibonacci
The interrupted three soldiers at the start of the week could be seen as suggesting continuing gains. We can also note the long tail of yesterday’s candlestick from noon GMT as indicating demand to buy the dips. Given gold’s recently high volatility, though, it’s particularly important to make sure that any signals received from price action are supported from other uncorrelated sources.
The upper area of the daily Fibonacci retracement seems to be active still as a support, coming as it does in the value area between the 100 and 200 SMAs. A bounce might be expected if this area is tested again in the near future. Meanwhile resistance from Fibo here appears to be the four-hour’s 61.8% retracement area. A breakout either up from there or down from the 50% four-hour retracement zone might help to determine direction in the short term.
Futures on gold
This four-hour chart of futures on gold (COMEX, continuous with current contract at front) basically reflects what’s been happening on the chart of spot CFDs on XAUUSD. The primary difference that can be observed here is much higher buying volume this week. Given the degree of centralisation in futures markets compared with CFDs, this is fairly likely to be a reliable signal although with the caveat that these buyers might be focussing on the short term.
Annual futures on gold
Annual futures continue to display a fairly small contango, a ‘normal’ situation. Each contract has made some losses in August so far as prices align with deliverable spot gold, so the annual difference is now about 2%. December’s contract is the only one to have high volume, though.
Technical analysis of XAUUSD: summary
The technical picture for gold is still fairly positive although signs of lower momentum are fairly clear. Consolidation seems to be possible over the next few days. As of now, a deeper retracement much below $1,970 is unfavourable, but traders should continue to monitor events in stock markets and be prepared for surprises.
Many thanks once again to Xolile Mnisi for having requested this article. Please join us again tomorrow for more TA!