The short the world has been waiting for is finally here!! The XAU/USD pair has been in a downtrend since reaching a high of 2,075.47 in August 2021. The pair has formed lower highs and lower lows, indicating a strong selling pressure.
- The pair recently broke below the support level of 1,920.22, which was the low of October 2023. This level also coincided with the 50% Fibonacci retracement of the uptrend from March 2020 to August 2021. This break suggests that the pair may continue to decline towards the next support level of 1,765.12, which is the 61.8% Fibonacci retracement and the low of March 2021.
- The pair is also trading below the 200-day moving average (MA), which is a bearish sign. The 200-day MA is currently at 1,945.67 and acts as a dynamic resistance for the pair. The pair may face some selling pressure if it attempts to retest this level.
- The on-balance volume (OBV) indicator shows that the volume has been decreasing as the price has been falling, indicating a lack of buying interest and confirming the downtrend. The OBV is also below its 200-day MA, which is a bearish sign⁶.
- The moving average convergence divergence (MACD) indicator shows that the pair is in a negative momentum, as the MACD line is below the signal line and both are below zero. The MACD histogram is also negative and increasing, indicating that the bearish momentum is strengthening⁶.
- The relative strength index (RSI) indicator shows that the pair is in an oversold territory, as the RSI is below 30. However, this does not necessarily mean that a reversal is imminent, as the RSI can remain oversold for a prolonged period of time in a strong downtrend. The RSI would need to break above 50 to signal a possible change in trend⁶.
- The stochastic oscillator shows that the pair is also oversold, as the %K line is below the %D line and both are below 20. However, like the RSI, this does not guarantee a reversal, as the stochastic can remain oversold for a long time in a downtrend. The stochastic would need to cross above 80 to indicate a possible bullish momentum⁶.
In conclusion, based on the chart and the indicators, XAU/USD is in a bearish trend and may continue to decline towards the next support level of 1,765.12. However, there may be some short-term corrections or consolidations along the way, as the pair is oversold and may encounter some resistance levels. Therefore, traders should be cautious and use proper risk management techniques when trading this pair.
Source: Conversation with Bing, 23/10/2023
(1) 7 Technical Indicators to Build a Trading Toolkit - Investopedia. www.investopedia.com...lysis-tools-4773275.
(2) XAU USD Chart - Investing.com. www.investing.com/cu...ncies/xau-usd-chart.
(3) XAUUSD Chart — Gold Spot US Dollar Price — TradingView. www.tradingview.com/symbols/XAUUSD/.
(4) XAU/USD Chart - FXStreet. www.fxstreet.com/rat...charts/xauusd/chart.
(5) Live chart for XAUUSD - FX Blue. www.fxblue.com/marke...t-data/chart/XAUUSD.
(6) XAU USD Interactive Chart | Gold Spot US Dollar Chart - Investing.com. www.investing.com/cu...-usd-advanced-chart.
(7) Candlestick Bearish Reversal Patterns - StockCharts.com. school.stockcha...ts.com/doku.php?id=chart_a...
(8) Technical Analysis of Stocks & Securities | CFA Institute. www.cfainstitute.org.../technical-analysis.
(9) Learn About Bear Flag Candlestick Pattern | ThinkMarkets | EN. www.thinkmarkets.com.../bear-flag-pattern/.
- The pair recently broke below the support level of 1,920.22, which was the low of October 2023. This level also coincided with the 50% Fibonacci retracement of the uptrend from March 2020 to August 2021. This break suggests that the pair may continue to decline towards the next support level of 1,765.12, which is the 61.8% Fibonacci retracement and the low of March 2021.
- The pair is also trading below the 200-day moving average (MA), which is a bearish sign. The 200-day MA is currently at 1,945.67 and acts as a dynamic resistance for the pair. The pair may face some selling pressure if it attempts to retest this level.
- The on-balance volume (OBV) indicator shows that the volume has been decreasing as the price has been falling, indicating a lack of buying interest and confirming the downtrend. The OBV is also below its 200-day MA, which is a bearish sign⁶.
- The moving average convergence divergence (MACD) indicator shows that the pair is in a negative momentum, as the MACD line is below the signal line and both are below zero. The MACD histogram is also negative and increasing, indicating that the bearish momentum is strengthening⁶.
- The relative strength index (RSI) indicator shows that the pair is in an oversold territory, as the RSI is below 30. However, this does not necessarily mean that a reversal is imminent, as the RSI can remain oversold for a prolonged period of time in a strong downtrend. The RSI would need to break above 50 to signal a possible change in trend⁶.
- The stochastic oscillator shows that the pair is also oversold, as the %K line is below the %D line and both are below 20. However, like the RSI, this does not guarantee a reversal, as the stochastic can remain oversold for a long time in a downtrend. The stochastic would need to cross above 80 to indicate a possible bullish momentum⁶.
In conclusion, based on the chart and the indicators, XAU/USD is in a bearish trend and may continue to decline towards the next support level of 1,765.12. However, there may be some short-term corrections or consolidations along the way, as the pair is oversold and may encounter some resistance levels. Therefore, traders should be cautious and use proper risk management techniques when trading this pair.
Source: Conversation with Bing, 23/10/2023
(1) 7 Technical Indicators to Build a Trading Toolkit - Investopedia. www.investopedia.com...lysis-tools-4773275.
(2) XAU USD Chart - Investing.com. www.investing.com/cu...ncies/xau-usd-chart.
(3) XAUUSD Chart — Gold Spot US Dollar Price — TradingView. www.tradingview.com/symbols/XAUUSD/.
(4) XAU/USD Chart - FXStreet. www.fxstreet.com/rat...charts/xauusd/chart.
(5) Live chart for XAUUSD - FX Blue. www.fxblue.com/marke...t-data/chart/XAUUSD.
(6) XAU USD Interactive Chart | Gold Spot US Dollar Chart - Investing.com. www.investing.com/cu...-usd-advanced-chart.
(7) Candlestick Bearish Reversal Patterns - StockCharts.com. school.stockcha...ts.com/doku.php?id=chart_a...
(8) Technical Analysis of Stocks & Securities | CFA Institute. www.cfainstitute.org.../technical-analysis.
(9) Learn About Bear Flag Candlestick Pattern | ThinkMarkets | EN. www.thinkmarkets.com.../bear-flag-pattern/.