European Open Tight ranges and holding patterns pre FOMC
The good news is that volatility cannot stay compressed for too much longer, and it could return to make a statement.
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Gold technical outlook: XAU/USD short-term trade levels
- Gold plunges into confluent support at yearly low
- XAU/USD at risk for near-term price inflection off this mark
- Resistance 1865, 1877, 1912/18– support 1823/28, 1807, 1787/91
Gold prices plunged more than 7.1% off multi-month highs with XAU/USD finding support last week at the objective 2023 yearly open. The yearly opening-range is set and we’re looking for possible inflection into this zone in the days ahead. These are the updated targets and invalidation levels that matter on the XAU/USD short-term technical chart.
Discussing this gold price setup and more in the Weekly Strategy Webinars beginning February 27th.
Gold Price Chart – XAU/USD Daily
Chart Prepared by Michael Boutros, Technical Strategist; XAU/USD on TradingView
Technical Outlook: Gold is trading just above confluent support at 1823/28- a region defined by the objective yearly open, the 2023 opening-range lows and the 38.2% retracement of the late-October advance. Looking for a possible reaction off this mark.
Gold Price Chart – XAU/USD 240min
Chart Prepared by Michael Boutros, Technical Strategist; XAU/USD on TradingView
Notes: A closer look at gold price action shows XAU/USD trading within the confines of a descending pitchfork extending off the January / February highs. A rebound off confluent support at the 25% parallel is in focus here with initial resistance eyed at 1865. Ultimately a breach / close above the November 2021 high at 1877 would be needed to invalidate the monthly downtrend.
A break below this key pivot would threaten a deeper decline towards initial support at the August 2022 high at 1807 and 1787/91- both levels of interest for possible downside exhaustion IF reached.
Bottom line: Gold is testing a major support pivot we’ve been tracking for weeks now- risk for price inflection at these levels. From at trading standpoint, a good zone to reduce short exposure / lower protective stops – losses should be limited to last week’s low IF price is heading higher on this stretch with a close above 1877 needed to shift the outlook higher again. Stay nimble here, a break below this threshold could fuel another accelerated sell-off towards downtrend support.
Review my latest Gold weekly technical forecast for a longer-term look at the XAU/USD trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on Twitter @MBForex
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