It looks like gold is taking a breather from its major rally, as the precious metal is retreating to correction levels.
Can the longer-term trend line stay intact?
Check out these inflection points being tested on the daily time frame:
Gold (XAU/USD) Daily Chart by TradingView
Gold has been on quite a tear over the past month, skyrocketing from the $3,500 area to record highs past $4,300 as safe-haven flows surged thanks to the prolonged U.S. government shutdown and resurfacing trade troubles.
Bulls seem to be catching their breath, though, sparking a pullback close to the 38.2% Fibonacci retracement level near R1 ($4,007.88) and a major psychological support.
Are more buyers about to jump in soon?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar and gold, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
A larger correction could still reach the 50% Fib at $3,855.52 or the 61.8% level closer to the pivot point ($3,722.45) and the longer-term ascending trend line that’s been connecting lows all year.
Keep an eye out for reversal candlesticks at any of these potential support zones, as a bounce could allow the uptrend to resume and take gold back up to the latest highs or to fresh ones near R4 ($4,728.18).
On the other hand, sustained losses below the trend line and S1 ($3,573.02) could mark the start of a longer-term reversal from gold’s stellar run, possibly taking it down to S2 ($3,287.59) close to the 200 SMA dynamic support or lower.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
