GOLD : Collapsing

(Wed, 25 Nov 2020). Gold prices have collapsed more than 4% off the weekly high with XAU/USD now testing the first majors support zone of interest. The decline constitutes a break of the monthly opening-range and while the threat remains lower, the sell-off is may be vulnerable here at confluence downtrend support.

These are the updated targets and invalidation levels that matter on the XAU/USD technical charts heading into the close of a volatile week. Review my latest Strategy Webinar for an in-depth breakdown of this gold technical setup and more.

Technical Outlook: In last week’s Gold Price Outlook we noted that the XAU/USD recovery remained vulnerable while below 1900 and to look for a reaction at key support at, “the 38.2% Fibonacci retracement of the yearly range / September low at 1837/48 with a break there exposing more a significant technical confluence at the 2012 high / 100% extension at 1790/1803- an region of interest for possible downside exhaustion IF reached.” Gold prices broke below lower early in the week with a decline of more than 3.5% now testing this key support zone – we’re looking for a near-term pivot here.

A break / close below 1790 is needed to keep the immediate short-bias viable with such a scenario exposing the 50% retracement at 1764 and critical support at the lower parallel / 100% extension at 1739. Daily resistance now back at 1848 with bearish invalidation lowered to the November monthly open at 1879.

Notes: A closer look at Gold price action shows XAU/USD trading within the confines an embedded near-term descending pitchfork formation with the decline testing confluence support today at the lower parallel / 100% extension at 1803 – the immediate decline may be vulnerable while above this threshold but the threat remains lower while below the median-line / 1836. A break lower keeps the focus on 1784/90 backed by 1764 and 1739.

Bottom line: A break of the November opening-range low keeps the focus lower in gold prices – that said, the decline is now testing the initial key support objectives. From at trading standpoint, a good zone to reduce short-exposure / lower protective stops- be on the lookout for topside exhaustion ahead of 1836 on recoveries IF price is heading lower. Ultimately, we’re on the lookout for a low heading into the close of the month with December typically a supportive month for Gold prices. Review my latest Gold Weekly Price Outlook for a closer look at the longer-term XAU/USD technical trading levels.

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