Today I’m going to show you exactly how I’m viewing gold (XAUUSD) as it retests a confluence of resistance from 2022.
I’ll also share an update on the USD index, the DXY, as continued dollar strength in November may start to weigh on gold.
Watch the video below and scroll down for the annotated charts and analysis.
Gold has had an incredible October, rallying 10% since the October 6th low.
However, gold bulls may have met their match with the confluence of resistance just below the $2,000 handle.
That’s the intersection of a key horizontal since April and the late 2022 trend line.
It’s the same trend line that produced the short opportunities in August that I discussed at length with VIP members.
Those opportunities occurred on the initial trend line break toward $1,890 and again during the $1,940 retest where $1,810 was our target.
Gold is once again testing that trend line at $1,990 after an incredibly aggressive rally.
Although we may see XAUUSD push through this resistance area, at some point, late longs will be liquidated.
That’s simply the nature of markets, especially one that has rallied 10% in a few short weeks.
More specifically, I’m referring to the areas around $1,940 and $1,890.
The latter is a bit of a stretch for now as gold would have to erase this week’s candle to tap that liquidity.
However, the liquidity at $1,940 is well within reach from current levels.
This is not to say gold will pull back to $1,940, as nobody knows where any market is going.
But I do think it’s a likely scenario that a trader must consider while XAUUSD trades below $1,990.
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