XAU/USD Technical Analysis | Forexlive
On the daily chart below, we can
see the price of gold is falling nicely with the blue short period moving
average acting as resistance. The price of gold is inversely
correlated with US real yields.
Given that the market started to
reprice a higher terminal rate from the Fed due to recent hot economic data and
a resurgence of inflation fears, real yields are expected to rise and the price
of gold to fall. The red long period moving average will act as the ultimate
resistance for the bearish bias for now.
On the 4 hour chart below, we can
see that the sell off lacks of momentum as depicted by the divergence between the price and the MACD. A divergence doesn’t signal
only reversals, but also possible pullbacks within a trend. In fact, pullbacks
are welcome in a trend as they keep it healthy.
A break of the resistance at 1855
could give a deeper pullback to the 1902 level as that’s when the divergence
started. For now, the bearish bias is intact and the sellers will have even
more conviction on a break below the 1827 level.
On the 1 hour chart below, we can
see more closely the selloffs and the pullbacks. Given that yesterday’s US
PMIs surprised to the upside we can expect the price falling to the support at 1827 with chances of a bigger
selloff if the sellers manage to break below that level.
On the other hand, if the price
breaks above the 1855 level, we may see the bigger pullback back to the 1902
level and that will be the last line of defence for the sellers.