Gold could be setting up for a big move
Gold has been moving steadily higher in an upward sloping channel since late November 2022, when price was near 1732. On January 12th, the yellow metal broke above the top trendline of the channel near 1890. The next day, XAU/USD broke above horizontal resistance and the 61.8% Fibonacci retracement level from the highs of March 8th, 2022 to the triple bottom lows (near 1617), at 1896.5. The top trendline of the channel, horizontal support (formerly resistance) and the 61.8% Fibonacci retracement now act as strong support. The most recent price patten of a long green bar higher, and 3 bars lower within the body of the green candle could be bullish. If Thursday’s candle closes above 1929, this will be an extremely bullish candlestick pattern known as “Rising Three Methods”.
In addition, Gold and the US Dollar Index (DXY) are negatively correlated with a correlation coefficient of -0.86. A reading of below -0.80 is considered a strong negative correlation. That is to say, when the DXY moves in one direction, XAU/USD should move in the opposite direction. Therefore, if the US Dollar continues its move lower, Gold should move higher.
The next resistance level isn’t until 1998.35, which is the high from April 18th, 2022. Above there, price can test the double top highs near 2071.
Below the 1890/1896 level, the next support is horizontal support at 1865.90, then the bottom trendline of the channel near 1840.
In addition, Gold and the US Dollar Index (DXY) are negatively correlated with a correlation coefficient of -0.86. A reading of below -0.80 is considered a strong negative correlation. That is to say, when the DXY moves in one direction, XAU/USD should move in the opposite direction. Therefore, if the US Dollar continues its move lower, Gold should move higher.
The next resistance level isn’t until 1998.35, which is the high from April 18th, 2022. Above there, price can test the double top highs near 2071.
Below the 1890/1896 level, the next support is horizontal support at 1865.90, then the bottom trendline of the channel near 1840.
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