Gold (XAU / USD) recorded the first weekly gain in three weeks, settling 1.20% higher above the psychological $ 1950 mark. On Friday, the metal nearly tested the critical hurdle of 1976 again, as the Fed’s accommodative rhetoric continued to put pressure on the US dollar alongside Treasury yields.
Markets have assessed the implications of Fed Chairman Powell’s call for rate cuts over a longer period to meet the twin goals of price and employment growth. In addition, the looming uncertainty over the US fiscal stimulus and new Japanese political concerns also bode well for safe haven gold.
As US NFP week approaches, will gold extend its bullish momentum? Let’s look at the key technical levels in order to have a better picture.
Gold: resistance and key supports
The Technical Confluences Indicator shows that the confluence of the previous four hour high, one hour SMA5 and 15 minute SMA10 at $ 1966 could cap the immediate rise in gold.
XAU bulls could face an uphill battle to reach crucial resistance at $ 1976, the previous week’s high, as a bunch of minor hurdles around $ 1973 lined up on their way north. This area is where the yesterday’s high, mid-day Bollinger Band, and four-hour Bollinger Band high intersect.
Higher, the previous month’s high of $ 1985 will be on buyers’ radar.
On the downside, the 23.6% Fibonacci on a week to $ 1960 could block corrective declines, below which the $ 1955 support will be exposed. This level corresponds to the convergence of the 38.2% Fibonacci in one day and the Bollinger Band in one hour in the middle.
Next on the sellers’ radar remains the $ 1950 level, which is the confluence of the 38.2% one week Fibonacci and 15 minute SMA100.
A robust support at $ 1947, the four-hour SMA10, will be put to the test if the bulls do not resist above the latter.
About Confluence Detector
The confluence detector finds interesting opportunities using Technical Confluences. TC is a tool for locating and signaling price levels where there is congestion of indicators, moving averages, Fibonacci levels, pivot points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as the basis of different strategies.
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