Today I’m going to share a possible fakeout that’s developing on XAUUSD (gold) and what it could mean for gold prices in November.
I’ll also provide an update on the US Dollar Index (DXY) to explain how a dollar breakout could affect the price of gold.
Watch the video below and scroll down for the annotated charts and analysis.
XAUUSD is at risk of losing a significant level this week at $1,980.
It’s a key horizontal level that dates back to April, and it also served as resistance on a daily closing basis earlier this month.
Gold closed last week above $1,980, so many would expect to see it serve as new support.
However, as mentioned to VIP members in Sunday’s forecast video, I didn’t like the fact that XAUUSD broke this critical area in the last few hours of Friday’s session.
Low-volume breakouts like we tend to see before the weekend are prone to failing.
I told VIP members on Sunday that I wanted to see a close back below the November 2022 trend line and $1,980 this week for a possible short opportunity.
It seems we’re getting the first part of that today.
If gold closes the day below $1,980, the area will flip back to resistance, and we’ll have a fakeout to trade.
But if gold closes today above $1,980, the area stays intact as key support.
That said, even a marginal close above $1,980 today flips the November 2022 back to resistance.
That trend line would come in near $1,996 during Wednesday’s session.
Keep in mind that we have a Fed rate decision on Wednesday, followed by non-farm payroll on Friday.
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