XAUUSD This level separates buying from selling

Gold (XAUUSD) is overextending its long-term bullish trend which we first called on our early November idea:


The overextension is being done within a Channel Up (green) pattern after the broke above the October 04 2022 Higher Highs and after the 1D RSI turned overbought above the 70.000 barrier on January 12. As long as the Channel Up holds, the price should aim at a new +3.00% (at least) Higher High extension, translated into a 1955 target.

A closing below the Channel Up though, should target the last known bounce level of January 05, the 4H MA50 (blue trend-line) and then the 4H MA100 (green trend-line), which last made contact with on December 23. However given the fact that overextensions typically burst more emphatically, they test lower support levels. As a result, in our opinion, the next Support level will most likely be the zone within the 4H MA200 (orange trend-line) and 1D MA50 (red trend-line).

A daily close below the 1D MA50 opens the way for the 1D MA200 (yellow trend-line), which is the strongest long-term buy level, but less likely to get tested. Another long-term buy indicator to look out for is when the 1D RSI approaches the 30.000 oversold barrier.

In both cases, the long term target is the 0.786 Fibonacci retracement level at 1972.


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