Traders and investors of Gold (XAUUSD) must have felt frustrated over the past 3 months, as Gold has seemingly formed a strong base at $2,300 – ready to take off into the stratosphere. Instead, Gold was once again rejected near the $2,500 level (at exactly $2,483.76), making it the third time it’s been rejected at the region.
With this third rejection, it’s safe to say that Gold is in some sort of a consolidation pattern. Unfortunately, it’s an ascending channel which has a bearish bias.
Currently, we are sitting at the mid level of the channel, which has been shown to be respected during this entire consolidation period from April – July 2024. If the price of Gold does decline from here, there are 3 key levels to watch. Let’s get into it.
Technical Analysis on XAUUSD (July 22nd, 2024)
As previously mentioned, Gold is sitting in an ascending channel consolidation with a bearish bias. The RSI indicator also suggests a bearish divergence is in play, adding to the idea of a bearish outlook in the upcoming days.
However, just as not all rising wedges break towards the downside, not all ascending channels break bearishly.
Support Levels to Watch:
- The lower trendline of the ascending channel is currently aligned with a large volume node, sitting at approximately $2,300 – $2,325.
Given that $2,300 is a psychological level with decent trading volume, this area should act as a powerful support level.
- The consolidation range between $2,150 – $2,180 does not have as significant trading volume, but could serve as a temporary bounce point for Gold.
- The absolute level not to lose would be the major psychological level at $2,000, which coincides with the Point of Control at $2,025. If this key level is lost, it would be extremely bearish for Gold.
Personally, I do not think Gold would be able to breach $2,000, and would first be eyeing the $2,300 level. If a bounce is provided, a safe (partial) exit point for a long position would be at the midpoint of the channel.
You may also be interested in:
Canada BoC Interest Rate Decision
