FX.co ★ XAU/USD, GOLD

XAUUSD M-15 Time Frame Update On Wednesday, gold rallied to a high of $5,011 before testing resistance at the 20-day average for the second time. This reflects short-term weakness until the 20-day average, now at $5,003, is regained. If crucial support levels are maintained throughout any more dip, gold might rebound even more. The low of $4,842 set on Tuesday provides near-term support. If it breaks, a deeper fall from last weeks lower swing high of $5,119 is more likely. The 50-day moving average, currently at $4,673 and climbing, is a key lower support level. However, the recent interim swing low of $4,655 should be viewed in conjunction with the 50-day line. If the upper swing low is breached, the second leg up from the bottom will fail. The second leg up began at that low and reached a slightly fresh high of $5,119 from last week, while the first leg up concluded at $5,092. Note that the bounces peak fell just shy of completing a 61.8% Fibonacci retracement of the last major fall at $5,141. Long-term gold investors should analyze the relationship to the rising trend channel. The current higher swing low of $4,402 is part of the bull trends pattern of higher swing lows and highs. Despite a dramatic 21.4% loss from the $5,598 peak, support at the 50-day average held, resulting in a rapid reversal. Furthermore, the top of the channel added to the prominence of that support area. That top boundary was effectively challenged as support for the first time since the trend breakout in January. The confluence of the two indicators at the low emphasizes the significance of that support zone. XAUUSD D-1 Time Frame Update The small increase in gold prices on Thursday to a high of $5,022 did little to change the short-term gloomy outlook. The 20-day average provided resistance for the third day in a row, confirming the bearish implications of a recent plunge below it. A tight range day on Thursday shows buyers and sellers virtually equal, but at a significant short-term resistance level. Since the 20-day average has failed to provide support, the 50-day average emerges as the next dynamic level. It is currently at $4,688 and climbing. Once a pullback to test previous support as resistance is complete, sellers may regain control, at least in the short term. A drop to the 50-day average would provide a stronger foundation for finding support and attracting buyers. However, given the recent low volatility environment, a typical response from major price levels may not occur if consolidation persists. The 50-day average, however, continues to be a crucial dynamic support for the trend, as it has been since August. Gold retraced about 61.8% of its huge drop rebound, reaching $5,519. That is a typical retracement and not an extreme. However, it does not impede the continuing of the movement toward higher goals. If the 61.8% Fibonacci retracement at $5,141 is regained, the next Fibonacci objective at $5,345 becomes visible. The price of gold fell by $1,195, or 21.54%, from its high to low in just three days lately. Following comparable rapid swings, it is fairly uncommon to experience a period of lesser volatility as the price range narrows. Both buyers and sellers lose interest, and direction is uncertain. The 20-day average passing directly in the middle of a range formed after February 2 is one example of this. Moving averages are trend indicators and thus more dependable in trending markets. Although they can provide short-term signs in a consolidating market, such as gold, they are not as reliable as a pivot in trending markets. Furthermore, a 100% projection of a rising ABCD pattern indicates that price level. That is the current top goal for gold, with the 50-day average providing a floor. Consolidation in that range may last for weeks or months.