Gold Price Prediction: XAU is testing major support

Gold price forecast talking points:

  • Despite the fascinating backdrop to the recent moves in silver, gold prices have been relatively subdued and subdued, having range for much of the past two weeks.
  • Price action has been pushed below a support trendline that forms a symmetrical triangle, which could put more pressure on recent range support.
  • The analysis in article is based on price promotion and chart formations. For more information on price action or chart patterns, check out our Finance Prop Education section.

After a captivating bullish theme took over the gold price last summer, the yellow metal has now spent nearly six full months digesting those gains. And more recently, the price action has been even quieter, as short-term gold prices have been built into a fairly consistent range.

Based on the two-hour chart below, we can focus on that dynamic. Support tends to last from about 1825-1836, with each of those awards coming from a Fibonacci study. And resistance has been shown from around 1859 to 1873, again, with each price represented by a Fibonacci level.

Golden prediction

Golden prediction

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Gold two-hour price tag

Gold price tag for two hours

Chart prepared by James Stanley; Gold on Tradingview

The outer limits of this range, 1825.31 support and 1873.01 resistance, are each derived from June-August’s great move in gold. These are the markers of 50 and 61.8% of that big move. And if you take a step back, there is another issue that needs to be addressed, and that is the symmetrical wedge that has built up over the past year. Prices are currently trading below the support side of that formation, although that happened before, a few weeks ago, when prices fell sharply to the 1801.47 level.

This could potentially load the argument around support outages: if buyers are unable to maintain range support in the 1825-1836 range and push prices to another test around 1800 handle, there could be deeper breakdown potential as both range and symmetrical triangle support would have been tested.

To find out more about the symmetrical triangle, checking out Finance Prop Education

Gold daily price card

Gold daily price card

Chart prepared by James Stanley; Gold on Tradingview

Short term golden strategy

When traders find a range, there are really only a few ways to go about it. Avoiding and looking for a trend is certainly one route; but as for the action, traders can either search for the range to proceed or wait for the range to break.

Given that prices are testing below the support side of the symmetrical triangle, there could be more hope of some dropout potential. When this occurs, the area 1800-1801 becomes another item of possible support, after which the confluent zone around 1763-1766 comes into view.

For those looking to continue the range, support is essential, with an emphasis on the range resistance zone that has already run a few different tests over the past few weeks.

Gold price tag for four hours

Gold four-hour price tag

Chart prepared by James Stanley; Gold on Tradingview

— Written by James Stanley, Senior strategist for Finance

Get in touch and follow James on Twitter: @Jndkgrf

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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