Weekly timeframe: Bearish outside reversal
What a week it has been for the precious metal. Spot gold (XAU/USD) kicked off last week refreshing all-time highs at $2,148 only to reclaim positive ground and tunnel into negative territory by the week’s end. Gold shed -3.3% on the week and pencilled in what many technical hands would refer to as a bearish outside reversal on the weekly chart (this type of formation focusses on the upper/lower shadows as opposed to the real bodies in engulfing formations).
What you’ll also observe from the weekly timeframe is that we now clearly have a resistance level to work with around the previous all-time high of $2,075 (you could include the $2,070 March high [2022] and the $2,067 May high [2023] to form a resistance area).
Given that there is also scope to discover lower terrain until weekly support at $1,969 and the weekly chart’s Relative Strength Index (RSI) recently established negative divergence, follow-through selling could be on the table this week. Venturing below the aforesaid support level might also shine the technical headlights on support as far south as $1,898.
Daily timeframe: Another bearish outside reversal
Following Monday’s bearish outside reversal candle off all-time highs, price action entered a somewhat subdued state a whisker ahead of trendline support taken from the low of $1,810. That was, of course, until Friday sliced lower and cleared buyers from the aforementioned trendline support and tested the grit of the widely watched $2,000 level. Looking ahead, support calls for attention at $1,989, followed by another support base at $1,965 (nestled just beneath weekly support mentioned above at $1,969).
Extending losses this week beyond $2,000?
With the weekly timeframe exhibiting room to manoeuvre lower this week, overthrowing the $2,000 psychological level and neighbouring daily support at $1,989 is certainly in the realm of possibility. This may unfasten the door for breakout selling opportunities towards weekly support at $1.969/daily support at $1,965.
Charts: TradingView
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