- Gold prices in consolidation below technical resistance ahead of key event risk next week
- Check o ut our 2018 Gold (XAU/USD) projections in our Free DailyFX Trading Forecasts
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Gold Daily Price Chart (XAU/USD)
Technical Outlook: Gold prices (XAU/USD) have set a well-defined June opening range just below a key resistance range at 1302/07 - a region defined by the October highs, the January, March and May lows and the yearly open. Note that the 75% line of the descending pitchfork formation also converges on this region into the start of next week with a pending RSI resistance trigger in view.
A breach above this key region shifts the focus to a more significant resistance confluence level at 1313 /15 where he upper parallel converges on the 100% extension and 38.2% retracement (bearish invalidation).
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Gold 240min Price Chart (XAU/USD)
Notes: A closer look at near-term price action sees gold prices consolidating off the May lows with our immediate focus on a break of the 129 1 -1305 range. A topside breach would shift the focus towards 1313/15 - an area of interest for possible near-term exhaustion / short-entries.
A break below 1291 shifts the focus back towards the 61.8% retracement at 1285 - weakness beyond this level would mark resumption for the broader downtrend with such a scenario targeting 1263 .
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Bottom line: Technical considerations made earlier in the week on the US Doll ar (DXY) , favor a near-term topside breach of this consolidation in gold prices before moving lower. That said, we would need to breach downslope resistance (1315) to suggest a more significant low is in place. For now, look for a break of this near-term consolidation range heading into next week with central bank interest rate decisions next week from the FOMC, ECB & BoJ and the Trump / Kim Jong Un, North Korean Summit likely for fuel added volatility in 'risk sensitive' assets.
For a complete breakdown of Michael's trading strategy, review his Foundations of Technical Analysis series on B uilding a T rading S trategy
Spot Gold IG Client Positioning
- A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.86 (79.4% of traders are long) - bearish reading
- Long positions are 0.8% lower than yesterday and 2.2% lower from last week
- Short positions are 9.3% higher than yesterday and 13.8% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Yet traders are less net-long than yester day and compared with last week and the r ecent changes in sentiment warn that the current Spot Gold price trend may soon reverse higher despite the fact traders remain net-lon g.
See how shifts in Gold retail positioning are impacting trend- Le arn more about sentiment!
Economic Calendar - Stay updated on the l atest e conomic d evelopments and u pcoming event ri sk
Other Setups in Play
- USD/JPY Technical Outlook: Decision Time for the Japanese Yen
- GBP/USD Technical Outlook: Sterling Rebound Eyes Initial Resistance
- AUD/USD Technical Outlook: Aussie Rebound Testing Key Resistance Hurdle
- USD Threatens June Correction- Dollar Crosses in Focus (Webinar)
- Written by Michael Boutros , Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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