Hello traders! Today gold has tested the 1975 resistance area formed between 18-20 August. At that time this level first was the support and then became the resistance, emphasizing the importance of it.
Considering the fact that this resistance area has been rejected today and price went down, perhaps a selling opportunity has been presented. Price could be heading towards the key support area formed near 1922, which is confirmed by two Fibonacci retracement levels. First being the 88.6% Fiobs applied to the last wave down occurred back on August 12, and second is the 38.2% Fibs applied to the 21-26 August downside move.
However, there is a small obstacle for the price and this is the 50 Exponential Moving Averages. Currently, it is acting as the support level which was rejected. Perhaps the final confirmation of the downside wave will be the break and close below 1956 on the hourly timeframe. Such price action certainly could be considered as the incoming Gold weakness, at least for the short term.
In regards to the upside risk, only a daily break and close above 1977 high, could invalidate the bearish scenario. In this case, XAU/USD long term uptrend can be expected to continue.
Bias: Strongly bearish while below 1977
Potential Resistance Zone: 1965 – 1975
Potential Targets: 1923
Have a profitable trading!