In our recent forex market outlook video, we spoke about the key levels on Gold and the potential for the market to reverse if the USD data was good this week.
The recent CPI data out of the US was better than expected leading to a bullish move for the USD creating a potential reversal opportunity for Gold.
Watch the video to learn more…
Today, we will do a quick update on Gold (XAU) because it could be setting up for a reversal opportunity soon.
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We identified the 1850 zone as a key high volume area in the weekly timeframe.
We’re expecting a retracement phase from this current daily uptrend because the market is making higher highs and higher lows at the moment. This is due to the US Dollar being extremely weak recently.
However, recent CPI data out of the US came out better than expected. This gave the US Dollar a boost today. That could trigger a few retracement moves, especially on the price of XAU.
So far, nothing has changed since the beginning of the week; we are still expecting the price to go back down into this 1781.50 area.
The price of Gold (XAU) could reverse since the recent CPI data from the USD was better than expected. This data strengthened the USD, and with the price of XAU at resistance, we could see a reversal to the current uptrend. In this week’s Forex Market Outlook, we spoke of the key levels to watch on XAU. Those levels remain the same; the support is still at USD 1782.71.
However, we can look at the four-hour timeframe and look for an opportunity in line with a reversal. Typically, if the market forms a retracement phase on a daily timeframe, the four-hour makes lower lows and lower highs.
So, we have a consolidation pattern forming now. Ideally, we want to see the price breakout of the consolidation, like so. We also want the price to break past these lows, rally up, retest the area of structure, then move towards 1781.50.
When the daily timeframe forms a retracement phase in an uptrend, we typically see the four-hour timeframe form lower lows and lower highs. At the moment, the price is forming a consolidation. If the price breaks through the lows, then we can expect to see a reversal opportunity on the retest.
We need to see two closes below the previous low at 1815.7. If the price closes below those lows, then we can look for a retest of the consolidation zone, then look for short opportunities down at 1781.5.
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