XAU/USD: Correction to Support?
Upside Momentum Slowing on the Monthly Chart
Despite the yellow metal working with a clear uptrend and shaking hands with fresh record highs, momentum to the upside has noticeably decelerated. This can be observed through price action and the Relative Strength Index (RSI) on the monthly scale, which tests overbought conditions and exhibits the possibility of negative divergence.
Breakout in Play
On the daily timeframe, gold recently ventured north of a consolidation between US$2,363 and US$2,470 late last week and also broke through the upper boundary of an ascending channel extended from the high of US$2,450. Consequently, before buyers attempt to take things higher, a textbook correction and retest of the breached boundary (black circle) could be seen to potentially deliver support. Dip buying?
H1 Technicals Converging with Daily Structure
Following the recent all-time high, H1 flow has pencilled in the beginning of an early short-term downtrend (lower low, lower high and subsequent lower low). What jumps out on the H1 chart, however, is support coming in at US$2,477, which happens to converge with H1 trendline support, taken from the low of US$2,381, and the breached resistances on the daily chart.
This H1 area of support is also located just south of the higher low at US$2,485 formed on 19 August (black circle). Since traders often position protective stop-loss orders beneath swing lows like US$2,485, whipsawing beneath this boundary could attract larger buyers looking to hit the offer from the noted H1 support on the back of the fresh liquidity.
Price Direction?
While upside momentum is slowing on the longer-term monthly chart, a correction on the daily chart to the recently breached resistance could be seen. This move may prompt dip buying, particularly from H1 support around US$2,477, which shares chart space with daily structure.
Despite the yellow metal working with a clear uptrend and shaking hands with fresh record highs, momentum to the upside has noticeably decelerated. This can be observed through price action and the Relative Strength Index (RSI) on the monthly scale, which tests overbought conditions and exhibits the possibility of negative divergence.
Breakout in Play
On the daily timeframe, gold recently ventured north of a consolidation between US$2,363 and US$2,470 late last week and also broke through the upper boundary of an ascending channel extended from the high of US$2,450. Consequently, before buyers attempt to take things higher, a textbook correction and retest of the breached boundary (black circle) could be seen to potentially deliver support. Dip buying?
H1 Technicals Converging with Daily Structure
Following the recent all-time high, H1 flow has pencilled in the beginning of an early short-term downtrend (lower low, lower high and subsequent lower low). What jumps out on the H1 chart, however, is support coming in at US$2,477, which happens to converge with H1 trendline support, taken from the low of US$2,381, and the breached resistances on the daily chart.
This H1 area of support is also located just south of the higher low at US$2,485 formed on 19 August (black circle). Since traders often position protective stop-loss orders beneath swing lows like US$2,485, whipsawing beneath this boundary could attract larger buyers looking to hit the offer from the noted H1 support on the back of the fresh liquidity.
Price Direction?
While upside momentum is slowing on the longer-term monthly chart, a correction on the daily chart to the recently breached resistance could be seen. This move may prompt dip buying, particularly from H1 support around US$2,477, which shares chart space with daily structure.
註釋
Area of support currently being tested... AH
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