(MENAFN- DailyFX) Gold pricesell-off testing confluence support- focus is on weekly close around 1275/76 Check out our 2019 projections in ourFree DailyFX Gold Trading Forecasts Join Michael for Live Weekly Strategy Webinars onMondays at 12:30GMT In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. Gold is virtually unchanged for the week thus far, with price now testing a major technical support zone we've been tracking for months. These are the updated targets and invalidation levels that matter on the XAU/USD weekly price chart.Review this week's Strategy Webinarfor an in-depth breakdown of this setup and more.
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Gold Weekly Price Chart (XAU/USD)
Notes: In my lastGold Price Outlookwe warned to be, 'on the lookout for downside exhaustion here near-term,' as price was attempting to confirm a weekly close below confluence support at 1275/76- a region defined by the yearlyopening-rangelow and the 38.2%retracementof the 2018 advance. Nearly three-weeks later and price has failed to mark a weekly close below- note that the August trendline also converges on this zone over the next two weeks and we're looking for a resolution.
Gold posted an outside-weekly reversal off fresh monthly highs last week with the sell-off takinggold pricesback into this key zone. A weekly close below is still needed to fuel another leg lower targeting more significant support / broader bullish invalidation at 1253/58. Monthly open resistance stands at 1283 backed by the May range high at 1303- a close above would be needed to validate the turn targeting the 2019 high-week close at 1327.
For a complete breakdown of Michael's trading strategy, review hisFoundations of Technical Analysis series on Building a Trading Strategy
Bottom line: The immediate focus is on the weekly close in relation to the 1275/76 zone. From a trading standpoint, a good spot to reduce short-exposure / lower protective stops. A weekly close below would leave the focus on 1253/58- look for a bigger reaction there IF reached. I'll publish an updatedGold Price Outlookonce we get further clarity in near-term price action. Review our latestGold 2Q forecastsfor a longer-term look at the technical picture forXAU/USD prices .
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Gold Trader Sentiment
A summary ofIG Client Sentimentshows traders are net-long Gold - the ratio stands at +4.32 (81.2% of traders are long) – bearish reading The percentage of traders net-long is now its highest since November 25th Long positions are 0.2% lower than yesterday and 11.6% higher from last week Short positions are 8.8% lower than yesterday and 29.8% lower from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsGold pricesmay continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint. See how shifts in Gold retail positioning are impacting trend-Learn more about sentiment!
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--- Written byMichael Boutros , Technical Currency Strategist with DailyFX
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