Intraday Market Analysis: XAU/USD Technical Comeback

XAU/USD Intraday Strategy

Gold (XAU/USD) gained a lot of attraction since the UK voted to exit the European Union (EU) in June, 2016. Aside its safe-haven characteristics, what is likely to affect gold in the next several weeks is the Fed monetary policy meeting. The Fed has been considering a rate hike throughout 2016 but to this date no action was taken aside a single rate hike at the beginning of the year.

Although we are not expecting a rate hike in September, the Fed may attempt to keep the flame of a possible hike this year, which is likely to pressure gold at an intraday level. Italy referendum is will play a key role in the gold but until an official date for the referendum is set (possibly in November) we are not factoring the referendum in our intraday strategy.

XAU/USD Daily Chart

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Gold Daily Chart 20/08/16

Gold Daily Chart 20/08/16

XAU/USD 4hr Chart

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Gold 4hr Chart 20/08/16

Gold 4hr Chart 20/08/16

Gold daily chart marks the potential for a bullish flag. A daily entry requires gold to break above the resistance (upper black line) or alternatively successfully test the support (lower black line). We quoted the daily chart to receive further insight into the precious commodity.

On the 4hr chart gold has successfully tested its nearest support line (in purple). If the markets were open we would have anticipated corrective gains to materialize within the next several hours. As the markets are closed it is difficult to predetermine the gap that may take place at the opening of the commodity markets on Sunday.

Assuming gold is able to trade above its nearest support, gold is expected to reverse higher, targeting 1,357. However, there may be many obstacles to the top. If the price stutters around 1,347 it may suggest gold lacks the strength to push higher, which may lead to a re-test of its support line (in purple).

If the support gives way at the opening of the market, 1,333 may contain any further weakness in the commodity. This requires a 4hr close after testing 1,333. If 1,333 gives way the lower support (in pink) is expected to hold. Those 2 levels may provide a clean entry to gold. We are not keen on shorting gold upon a break of its nearest support (in purple) although it is technically supported.

Only a break below the latter support (in pink) may suggest stronger selling in gold is expected, targeting the daily support line. If the daily support gives way we may head for heavier selling, targeting 1,300.

23/08/16 UPDATE: 1,333 provided the main support after being successfully tested following a 4hr close.

Please click on the chart to enlarge:

XAU/USD 4hr Chart 23/08/16

XAU/USD 4hr Chart 23/08/16

Intraday Market Analysis: XAU/USD Technical Comeback

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Intraday Market Analysis: XAU/USD Technical Comeback

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Intraday Market Analysis: XAU/USD Technical Comeback

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Intraday Market Analysis: XAU/USD Technical Comeback

Last Updated on November 20, 2016