Gold (XAUUSD) Technical Analysis & Reversal Potential

Gold (XAUUSD) Technical Analysis & Reversal Potential


– [Justin] What is it about this chart that has me hesitant about buying gold? Can you see it? Hey everyone, I’m Justin Bennett with Daily Price Action,
and in today’s video, I’m gonna show you the
key levels I’m looking for on gold, also known as XAUUSD, that’s gold versus the US dollar. I’m gonna show you the
key levels I’m watching as well as a possible
bearish reversal pattern that’s in the works. Let’s get to it. (upbeat music) Before we get started with
today’s gold analysis, be sure to hit that subscribe button below so you get notified every
time I post these videos. So were you able to spot
the bearish reversal pattern I mentioned? If not, that’s all right. Let’s head over to this annotated chart I have over here, and
you’ll quickly notice what’s happening. Now, before I get to
this, I want to point out something here, and this is important because it shows that
gold really hasn’t put in a significant pullback
since this August 2018 low. Now, this through here, this was actually a falling wedge pattern that broke out. This was the most significant pullback that we’ve seen since this
rally started 13 months ago. However, look at what
happened on this leg higher. We had this consolidation, but we never really got that significant pullback for this move that’s been occurring. So what that tells me is
that there’s a lot of buyers that could potentially be
trapped in this region, and the reason that’s significant is because what happens when buyers start to liquidate positions? A liquidation of a long
position is a sell, and that’s what can cause a hard pullback. Now I’m not saying that will happen, but I do think there is
the potential for it, and that’s important because sometimes it’s necessary to take a step back and see where a market has been in order to determine
where it’s likely to go, and as far as gold is concerned, I don’t want this video to
come across the wrong way because, technically speaking, this rally is still intact, so we have higher lows and higher highs. There’s no doubt about that. So for all we know, gold could be heading much, much higher from
here without putting in a pullback, okay? We saw it through here,
and so there’s no reason for me to think that gold will pull back. However, the pattern
that’s forming right now on the daily timeframe,
so notice that we have this swing high, and we also have this swing high right here. Now, gold is at a pivotal
point in this rally, in my opinion, because if it fails to get through this
1530, perhaps 1540 area in the days ahead, and we see a rejection off of this level and a return
back to this support level, then I do think we have the start of what could be a head
and shoulders pattern. So notice we have the left shoulder here, we have the head, and we have
a potential right shoulder. Now, we don’t know yet if
that is going to be confirmed. Again, for all we know,
gold could be heading much, much higher, and I
think in order to do that, gold is going to need to take out this year-to-date high up here. However, I do think that
if we see a move above that 1535, maybe 1540
area in the days ahead, that would be a sign of strength, but I do think that as
long as gold is below that 1535 level, that
buyers need to be careful. Again, this rally is
still intact as of now, but this formation would have me hesitant to buy gold at the moment. Now if we do see a daily close below this neckline support, and
that’s what it’s gonna take. So in order to confirm
this head and shoulders, we need to see a daily close below this neckline support down here, and at the moment that
level’s right around 1490, so if we see a daily close below that, then I do think this head and shoulders is confirmed, and we could also see a move down here toward 1450. So notice these swing highs through here, and a move below that would then target the 1410 region. Now, there’s actually a few reasons why 1410 is significant, and the first has to do with these lows
that I just pointed out. So these lows through here, this level would likely act as
support on the way down if we see a close below this neckline, and of course, if we
see a close below 1450. Now, it’s important because of these lows. However, there’s something
else happening here, and that is the Fibonacci. So this is the year-to-date low for gold, and this is the year-to-date high. So notice how these
levels start to line up with our Fibonacci retracement levels. So 31.2 lines up with that 1450. The 50% lines up around 1410, and the 61.8% lines up around 1380, which is this low through here. So again, this is the year-to-date low, and this is the year-to-date high. So there’s no doubt that this range is a significant one for gold, okay? So these levels are ones to keep an eye on if we do see that reversal materialize. Now, another reason
that 1410 is significant has to do with the measured objective for this potential head and shoulders, and remember, it is a potential pattern. This thing is not confirmed yet, so I’m not bearish gold as of yet, but if we do take a
measurement of this potential head and shoulders from
the neckline up here, and then we take that same measurement from a break of that neckline, we get a measured objective
somewhere right around 1410, maybe 1420. So this area right down
here is significant because of these lows. It’s the 50% retracement
of this year-to-date range, and it’s also the measured objective of this potential head
and shoulders pattern. So there’s a lot happening there at 1410 that you’re gonna wanna keep an eye on if this pattern does play out. But again, gold is in
rally mode until it isn’t, so until we see this pattern confirmed, this market is still
making these higher lows and higher highs, and
we have to respect that. We have to respect the potential that gold could come up here, retest these highs, consolidate for a little
bit, and then move higher. That’s certainly a possibility. So again, this is a
potential reversal pattern, but we do need to see sellers come out, force a retest of neckline support, close below that level,
and that would then expose this 1450, followed by
the measured objective around 1410, perhaps 1420. If you enjoyed this video,
give it a thumbs up. Leave your comment below and be sure to subscribe to my channel. See you next time. (upbeat music)

40 Comments

  1. Wonderful! In this video alone, you literally ran through the whole premise of technical analysis; levels, HnS, fibonacci, measured objective etc. You rock Justin

  2. Can't thank you enough Justin! I recently came across your posts on Forex Factory and was really impressed with your market analysis and opinions. And now these videos are awesome! Keep up the good work bro!

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