Gold, Chart of the Week: XAU/USD bulls eye a break of critical daily resistance
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CLAIM OFFER- Gold price has come under pressure on a spot basis, but a break of daily resistance this week could be on the cards.
- Meanwhile, mitigation of lower time frame price imbalances could be in play to start the week off.
Before getting into the spot gold price technicals, analysts at TD Securities explained that money managers aggressively liquidated gold longs as a hawkish Fed continues to sap interest in the yellow metal.
''After all,'' the analysts said, ''as the world chases the same hawkish Fed narrative, position squeezes continue to drive price action in the yellow metal.''
''Notwithstanding, proprietary traders are the cohort raising risks of additional liquidations, after having built a massive and complacent position since the pandemic. While the war in Ukraine has sent the bears packing at prop-shops, the cohort's longs have yet to capitulate. This week, prop traders only marginally liquidated their length, whereas the breadth of traders long hasn't budged, suggesting a liquidation event is still forthcoming.''
For the technical outlook, as per the prior pre-open analysis for last week, Gold, Chart of the Week: XAU/USD bulls need to hold $1,850 or a 61.8% golden ratio will be next on bear's menu, it was shown that the daily chart's W-formation's neckline near a 61.8% golden ratio was yet to be fully tested:
Gold daily chart, live market
As illustrated, the price moved in on the area and completed the retest of the neckline. This now offers prospects of a move higher from here following the move out of the downside channel. However, the resistance will need to give:
Gold, H1 chart
For the open, the hourly chart could see some initial bids come through to mitigate some of the latest bearish impulse. The 50% mean reversion area aligns with the prior support as a target. However, should resistance hold up, there could be a move into the downside to fully test the demand area in the $1,840s again.
- Gold price has come under pressure on a spot basis, but a break of daily resistance this week could be on the cards.
- Meanwhile, mitigation of lower time frame price imbalances could be in play to start the week off.
Before getting into the spot gold price technicals, analysts at TD Securities explained that money managers aggressively liquidated gold longs as a hawkish Fed continues to sap interest in the yellow metal.
''After all,'' the analysts said, ''as the world chases the same hawkish Fed narrative, position squeezes continue to drive price action in the yellow metal.''
''Notwithstanding, proprietary traders are the cohort raising risks of additional liquidations, after having built a massive and complacent position since the pandemic. While the war in Ukraine has sent the bears packing at prop-shops, the cohort's longs have yet to capitulate. This week, prop traders only marginally liquidated their length, whereas the breadth of traders long hasn't budged, suggesting a liquidation event is still forthcoming.''
For the technical outlook, as per the prior pre-open analysis for last week, Gold, Chart of the Week: XAU/USD bulls need to hold $1,850 or a 61.8% golden ratio will be next on bear's menu, it was shown that the daily chart's W-formation's neckline near a 61.8% golden ratio was yet to be fully tested:
Gold daily chart, live market
As illustrated, the price moved in on the area and completed the retest of the neckline. This now offers prospects of a move higher from here following the move out of the downside channel. However, the resistance will need to give:
Gold, H1 chart
For the open, the hourly chart could see some initial bids come through to mitigate some of the latest bearish impulse. The 50% mean reversion area aligns with the prior support as a target. However, should resistance hold up, there could be a move into the downside to fully test the demand area in the $1,840s again.
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