XAUUSD: Fake breakout or new reality?

XAUUSD: Fake breakout or new reality?

2023-12-05 • Updated

Gold price experienced a notable turnaround, gaining fresh bids after a $125 pullback from its recent peak. Federal Reserve Chair Jerome Powell's recent speech suggested a reluctance towards aggressive rate cuts, dampening speculations of immediate policy easing. Market sentiment leans towards the belief that the Fed has concluded its tightening cycle, with a growing likelihood of a rate cut by March 2024. A modest uptick in the US Dollar acts as a headwind, yet gold maintains a steady bullish tone amid concerns over a potential conflict in the Middle East. The ongoing global economic uncertainties and a shift to safer assets contribute to gold's upside, with upcoming economic data and the monthly jobs report anticipated to guide future trends.



In my last article on GOLD (XAUUSD), I mentioned that the safe approach to consider before selling Gold would be a break below the trendline, where the retest of the trendline would serve as the entry. However, due to rumors of possible conflict and civil unrest across several quarters, it is evident that earlybird investors may have already begun stacking up Gold as a hedging strategy. By the way, price didn’t break the trendline support; at least not until recently.

XAUUSD - W1 Timeframe


XAUUSD on the weekly timeframe appears to have hit the trendline resistance on the weekly timeframe, leading to a rejection of the price action, and ultimately a bearish move. It is notable to me, however, that the recent high is an actual break of structure, not a mere fakeout. This said, I expect price to drop into the demand zone I have marked in order to regain its bullish momentum. The confluences at that ‘point-of-interest’ include;

  • Bullish array of the moving averages;
  • 50-period moving average support;
  • Trendline support;
  • 70% of the Fibonacci retracement; and
  • A rally-base-rally demand zone.

Analyst’s Expectations: 

Direction: Bearish

Target: 1938.50

Invalidation: 2071.28


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