Hello traders! The price of Gold has been on a steady rise since the price bounced off the middle trendline of the descending channel at $1675. This occurred back on June 5, after which XAU/USD has risen by 18.72%. This was quite a rally, which might have come to an end.
In the $1980 area, Gold has formed a triple top, with the most recent rejection being today. Clearly sellers are strongly defending this level, perhaps because it is also a strong technical resistance which is confirmed by two Fibonacci retracement levels.
The first is 327.2% Fibs, applied to the corrective wave down where the channel middle trendline was rejected. The second is 23.6% Fibs applied to the point of the channel breakout so that 50% is placed at the breakout point.
All-in-all, Gold could be entering the correctional phase as long as current resistance is being respected. Price can easily decline to test the channel breakout point at $1875, which corresponds to the uptrend trendline. If this support will be broken, XAU/USD might fall much stronger. The key demand zone is seen near $1713, which is based on the previous trading volume. This means that potential correction might reduce the price of gold by $267 in the coming weeks.
In regards to the upside potential, the highest high has been printed at $1983. Daily and 4H break and close above this level will invalidate expected bearish scenario and XAU/USD could be heading towards the massive psychological resistance near $2000.
Bias: Bearish while below $1983
Potential Resistance Zone: $1980 – 1983
Potential Targets: $1875, $1730
Have a profitable trading!