The XAUUSD (gold) is playing out nicely so far.
I’ve discussed the falling wedge below several times, including the December 17th commentary.
I also pointed it out in the most recent weekly Forex forecast on the 21st.
If you watched that forecast video, you should recall that I thought XAUUSD was the most interesting pair for the week ahead.
In other words, it boasted the best looking price structure, in my opinion.
We also knew that the next leg higher was likely to materialize following a daily close above the confluence of resistance at 1480.
The December 23rd close at 1485 did just that.
So far, gold is well on its way to retest our first target at 1515.
Notice all of the highs in this region between October 3rd and November 1st.
That 1515 area is also close to the 61.8% Fibonacci retracement of this latest pullback between September and November.
However, while I do expect XAUUSD to encounter selling pressure near 1515, I don’t know that I would want to short the pair.
This latest breakout from falling wedge resistance could be the start of more than just a one-week rally.
As I mentioned in Saturday’s forecast video, the consolidation since September combined with the 2019 rally looks constructive.
In other words, the falling wedge is most likely a continuation pattern.
So, while we could see XAUUSD sellers defend 1515, it may only act as a temporary roadblock to the broader rally.
Remember that gold has been trending higher since August of 2018.
With that in mind, the 1515 area remains my first target, but I do think XAUUSD has the potential to reach 1550 over the coming days and weeks.
Of course, that’s just my opinion.
As always, the market will have the final say in where gold goes from here.
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