Technical analysis of XAUUSD
Gold has continued to hold close to all-time highs today around $1,977 amid relatively low volatility. Among the fundamental factors for the yellow metal’s recent strength are increasing expectations of an extended period of economic recovery, rising numbers of cases of covid-19 in various countries and continuing tension between the USA and China. Today’s technical analysis of XAUUSD looks at the four-hour chart compared with futures.
The critical psychological area of $2,000 is likely to be the most important resistance. Low support on this timeframe could be the lower psychological area around $1,800, although $1,900 will probably be a strong area over the next few weeks.
Technical indicators on XAUUSD H4
Moving averages continue to print a strong buy signal, with each of the 50, 100 and 200 simple moving averages successively above the others. The space between the three lines has also expanded significantly over the last few days of trading. The first main area of support from moving averages is the 50 SMA from Bands around $1,944.
There is currently no overbought signal from Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5). The latter though at about 73 remains close to the trigger zone for buying saturation. Volume has decreased somewhat so far this week although buying volume remains overall higher than selling.
Price action and Fibonacci
Recent price action reflects lower momentum, with smaller real bodies of candlesticks and generally somewhat larger wicks and tails. Gold hasn’t consolidated after the recent bout of big gains, instead continuing to test new highs latterly last week.
Price has extended fairly far beyond the daily Fibonacci fan. The 38.2% zone might be the initial area of focus for a developing consolidation. Beyond this, the 100 and 200 SMAs will probably offer support before any test of the 50% daily Fibonacci fan.
Futures on gold
Futures on gold (COMEX, continuous with current contract at front) have made larger gains than spot CFDs. This chart of futures displays that a clear new high has been reached as of late last week. Traders will probably focus on this chart and other data for futures for information on the development of a consolidation that might be used to enter buying trades.
Annual futures on gold
Annual futures on gold (NYMEX) continue to display a shallow contango, a ‘normal’ situation now that next year’s contracts have adjusted to reflect recent spot gains. By far the highest volume is for December 2020’s contract, suggesting that $2,000 can probably be reached within the next few weeks unless there’s a sudden change in the tone of the news.
Technical analysis of XAUUSD: summary
Fundamentals are likely to be very important this week. Apart from the USA’s balance of trade tomorrow afternoon GMT, the main focus of participants will be on Friday’s NFP. A surprising result from this could bring higher than normal volatility to the chart of gold.
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