Gold, XAU/USD, Silver, XAG/USD – Technical Forecast:

  • Gold continues to flirt with key tech support.
  • Silver has been consolidating after a decent rally this month.
  • What is the outlook and key levels to watch for a trend reversal?

Recommended by DailyFX

How to trade gold

TECHNICAL FORECAST FOR GOLD – BEARS

The lack of follow-up spot gold price action after last week’s break below the important horizontal trendline support at 1676 (aligned with the 200-week moving average) raises some doubts about the reliability of the bearish signal. However, falling behind after the break is not in itself enough to conclude that the move was a mistake – it could well mean falling behind. While the yellow metal is holding below 1676, the next drop could happen next week or at the right time.

For a false breakout like the recent silver breakout (see chart) to occur, gold would need to at least rise above the September 15, 1698 high – an outside chance that was noted last week. So far, this has not happened even on an intraday basis. Therefore, the short-term outlook for gold remains bearish. A rise above 1,698 could pave the way for a high of 12 September 1,735.

From a big picture perspective, a decisive break (at least two weekly closes) below 1676 would trigger a double top pattern (2020 and 2022 highs), indicating a potential drop to the 200-month moving average (now around 1292). ). There is quite strong support at 1620 (50% retracement of 2018-2020 rise), followed by 1510 (61.8% retracement).

XAU/USD and XAG/USD daily chart

The chart is created using TradingView

Silver TECHNICAL FORECAST – NEUTRAL

Silver’s overall neutral bias from last week remains unchanged. As noted then, the multi-month slide is losing steam on higher timeframes, increasing the prospect of sideways conditions in the interim. From a multi-week perspective, 17.50-21.00 is a potential range, despite this week’s sideways price action giving the impression of an even narrower congestion zone.

After a sharp rally earlier this month, silver has strengthened below key resistance at the 20.00 psychological and technical mark (which includes the September 12 high). It is crucial that silver breaks above this resistance if the overall recovery structure from the beginning of the month has legs. Such a breakout could open the way to 21.00 (the August high, which roughly coincides with the 200-week moving average).

On the other hand, a decisive break below the September 16 low of 18.76 would suggest that this month’s bounce was a dead cat bounce, raising the prospect of a retest of the September 1 low of 17.53. Also, a decisive break below 17.53 would be a sign that silver has resumed its medium-term downtrend.

XAG/USD 3 hour chart

XAG/USD 3 hour chart

The chart is created using TradingView

— The author Manish Jaradi, Strategist for DailyFX.com

Source link