
As you must already know, the direction of Gold is mainly dependent on the Price action of DXY (US Dollar index). So first, we take a look at the US Dollar index.
2020-01-09 • Updated
The advance of gold (XAU/USD) this week has been too rapid. The precious metal got overbought. Both on the W1 and H4, the price highs weren’t confirmed by the highs of the Awesome Oscillator. In other words, there was bearish divergence. On the D1, a spike was formed and XAU/USD turned around to the downside and closed at the previous day low thus engulfing Tuesday’s and Monday’s candlesticks. It seems that there’s an interim top and that the correction might take the price further down.
A decline below 1,540 (50-period MA on H4) will open the way down to 1,528 (50% Fibonacci of the November-January advance). The next support will be at 1,509. The major resistance is located at 1,557. The return to this area may once again attract sellers. Only the advance above this point will let the price rise back to 1,577.
Trade idea:
SELL 1,538; TP1 1,528; TP2 1,510; SL 1,543
As you must already know, the direction of Gold is mainly dependent on the Price action of DXY (US Dollar index). So first, we take a look at the US Dollar index.
A comparative examination of the strength of the US-Dollar often gives tangible insight into the direction of Gold (XAUUSD). The chart above indicates the expectation of a bullish price reaction from the demand zone.
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