XAUUSD broke key support on Thursday, but will it hold into the daily close, and what does that mean for Friday?
Watch today’s gold video below for the latest, including an update on my trade.
Gold has had an eventful week. Monday’s session tested the $3,370 resistance area, as noted in the Weekly Forex Forecast. It’s a level we discussed in VIP last week as a target for XAUUSD when the market was trading at $3,322 last Thursday.
Tuesday’s session was relatively quiet, marking a lower low within the context of a descending channel since June.
However, Wednesday’s Trump vs. Powell drama triggered a sweep of Monday’s highs. It was also another retest of the $3,370 resistance area.
In recent videos, I’ve discussed how the invalidation of my short from $3,357 is a sustained break above $3,370. The keyword is “sustained”, and Wednesday’s price action was hardly that.
XAUUSD wicked above $3,370, but buyers failed to establish it as new support on the higher time frames. As a result, I remained in my gold short position throughout Wednesday’s volatility.
Fast forward to Thursday’s session, and XAUUSD is following through on the recent downtrend. The intraday break below $3,322 flips the area to new resistance. Key support levels are $3,285 and $3,250.
Another factor that could influence gold is the DXY as it approaches the 99.35 range highs we’ve discussed. The US dollar’s reclaim of 97.70 last week is undoubtedly bullish; however, sellers will likely defend the 99.35 level.
Given the well-documented inverse correlation between gold and the US dollar, that could affect gold’s price action this month. Time will tell if that becomes a short-term factor or something more significant.
For now, I will continue to trade gold as a ranging market and manage my trade one level at a time.
