Gold Technical Analysis a Forex Workshop
In today’s comprehensive Gold technical analysis, we will first examine the pair’s price action on the daily chart. Then, we will explore the technical indicators and key support and resistance levels to see what could be next for the XAUUSD.
Gold Technical Analysis a Forex Workshop
FxNews – The gold price currently trades around $2,065, marking a 0.15% decrease from yesterday. This slowdown in gold’s price can be attributed to two main factors:
- We are in the New Year’s holiday season, resulting in lower market liquidity.
- The market is approaching the $2,075 resistance, the highest daily close recorded in November 2023.
The chart below highlights the $2,075 mark on the XAUUSD daily chart.
Gold Technical Analysis a Forex Workshop – Daily Chart
Delving into the 4-hour chart offers a clearer perspective of the XAUUSD technical analysis. I have utilized four technical indicators to analyze the price action in detail. This approach helps mitigate trading risks by providing comprehensive market information.
- Relative Strength Index (RSI) detects when gold is overbought or oversold.
- Awesome Oscillator: It helps identify market divergence, forecasting potential trend reversals or consolidation phases.
- Envelopes Indicator: This confirms market saturation, working with the RSI indicator. You can familiarize yourself with the envelope indicator by reading this article.
XAUUSD is Trading Above Ichimoku Cloud
The overall trend for the precious metal appears bullish, as the price is trading above both the Ichimoku cloud and the bullish flag. For those unfamiliar with the Ichimoku cloud, I recommend reading this article for more insights. Another bullish indicator is gold trading above the 50% Fibonacci support level, which is often pivotal. This suggests that if the price can recover and gain 50% of its recent losses, there’s potential for further upward movement in the value.
The 4H chart below shows that the XAUUSD is moving within a bullish channel. The lower band aligns with the 38.2% Fibonacci support, lending additional support to the uptrend.
XAUUSD Technical Analysis – Forex Workshop – 4H Chart
Moreover, the RSI indicator hovers near the overbought area, around the 70 level, indicating a possible overbought market. Interestingly, the Awesome Oscillator raises speculation of an imminent trend reversal or consolidation as it signals divergence.
Summary
In conclusion, considering the upcoming holidays, the New Year, and the signs of an overbought market, I advise against going long on the pair. It’s prudent to reconsider your buying plan if gold pulls back to the $2,038 level, which coincides with the 38.2% Fibonacci support. This level offers a favorable entry point for joining the bullish market. However, watch for candlestick patterns as the market approaches this demand level.
To sum up, the market remains bullish as long as the price stays above the Ichimoku cloud.
The bullish trend may no longer be valid if the price exceeds the 23.6% Fibonacci level. This level is important because it’s $50 lower than the current price, and it’s the last point at which we can still consider the market to be on an upward trend.
Given that this level is significantly lower, and there’s a risk the price could fall even more, I recommend not buying at the current price. Instead, it’s better to wait and see if the price decreases and then start rising again before purchasing.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
