Mighty Gold Hovering Ahead of Key Support
With the sell-off in US Treasuries, spot gold has taken a back seat versus the US dollar (XAU/USD) from recently printed record highs (US$2,685) and is establishing a picture-perfect AB=CD correction on the daily scale.
Daily ‘Alternate’ AB=CD Support
For any harmonic traders reading, you will likely note that the daily AB=CD in focus represents an ‘alternate’ AB=CD, an extended version of the equal pattern that completes around the 1.272% Fibonacci projection ratio of US$2,597.
Also technically appealing, aside from the uptrend favouring buyers, is support converging with the AB=CD structure at US$2,590 and neighbouring trendline support, extended from the low of US$1,984.
Regarding the Relative Strength Index (RSI), after reaching 77.51 (overbought – levels not seen since April this year), the RSI has rapidly dropped to within striking distance of the 50.00 centreline. Should the indicator make a U-turn off this area as price shakes hands with AB=CD support, this would be considered a positive hidden divergence and thus reinforce the noted support levels.
Short-Term Selling? Long-Term Buying?
Moving across to the H1 chart, resistance warrants attention between US$2,633 and US$2,631, positioned just north of local tops around US$2,624 (blue oval). Given the liquidity likely located north of these tops, a whipsaw beyond here into the H1 resistance zone mentioned above could be a bearish scenario worthy of pencilling in the watchlist given the scope to venture south on the daily until the upper edge of support from US$2,590. Alternatively, a move lower from current levels is equally possible on the H1 scale, targeting the daily support.
Therefore, according to chart studies, bears have the upper hand in the short term, though once/if price reaches daily support, this will likely shift the pendulum to a buyers’ market in light of the long-term uptrend, AB=CD correction and daily support area.
Daily ‘Alternate’ AB=CD Support
For any harmonic traders reading, you will likely note that the daily AB=CD in focus represents an ‘alternate’ AB=CD, an extended version of the equal pattern that completes around the 1.272% Fibonacci projection ratio of US$2,597.
Also technically appealing, aside from the uptrend favouring buyers, is support converging with the AB=CD structure at US$2,590 and neighbouring trendline support, extended from the low of US$1,984.
Regarding the Relative Strength Index (RSI), after reaching 77.51 (overbought – levels not seen since April this year), the RSI has rapidly dropped to within striking distance of the 50.00 centreline. Should the indicator make a U-turn off this area as price shakes hands with AB=CD support, this would be considered a positive hidden divergence and thus reinforce the noted support levels.
Short-Term Selling? Long-Term Buying?
Moving across to the H1 chart, resistance warrants attention between US$2,633 and US$2,631, positioned just north of local tops around US$2,624 (blue oval). Given the liquidity likely located north of these tops, a whipsaw beyond here into the H1 resistance zone mentioned above could be a bearish scenario worthy of pencilling in the watchlist given the scope to venture south on the daily until the upper edge of support from US$2,590. Alternatively, a move lower from current levels is equally possible on the H1 scale, targeting the daily support.
Therefore, according to chart studies, bears have the upper hand in the short term, though once/if price reaches daily support, this will likely shift the pendulum to a buyers’ market in light of the long-term uptrend, AB=CD correction and daily support area.
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