Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
Gold (XAUUSD) has been trending higher since May.
And it hasn’t been a slow grind higher either.
This has been one of the most aggressive rallies from the metal since early 2016 when gold went from 1050 to 1370 in seven months.
What’s even more impressive about the recent rally is the gain to loss ratio on the weekly time frame.
Between mid-May and mid-August, XAUUSD only experienced one down week.
That’s one red week out of fourteen!
But did you notice something that isn’t so bullish about the weekly chart above?
Go ahead and take another look.
Do you see it?
Last week’s range carved a bearish engulfing candle.
And so far, sellers are following through on that sell signal quite aggressively.
In fact, XAUUSD is approaching a confluence of support at 1480 that if broken, could signal the end of this rally.
At a minimum, it would likely trigger a significant pullback.
As always, though, it’s going to take a daily close below 1480 to open up downside targets.
One of those targets is 1450.
That area marks the highs from mid-July and early August.
However, I do think that if the 1480 support area fails, we could see gold pullback all the way toward the 1410 region.
Not only has 1410 been a key factor on the weekly time frame, but it’s also the 50% Fibonacci retracement of the year-to-date range.
There’s even potential for a more significant pullback given the breakdown of a broader pattern I just pointed out to Daily Price Action members in today’s video.
Either way, I think this gold rally is in desperate need of a pullback toward 1450, 1410, or perhaps even lower.
A close below the confluence of support at 1480 is all we need.
[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
Want to watch a video of how I’m trading gold?
Join DPA Today and get exclusive member-only content!