Technical analysis update: Gold (20th January 2022)

20. Jan. 2022

Yesterday gold broke above the key technical level at 1835 USD. We previously noted that we expected this breakout to the upside and eventual resumption of the uptrend. We continue to maintain a bullish outlook on gold. Our view is supported by bullish fundamental and technical factors. We believe that persistent high inflation combined with FED putting U.S. economy to stress with hiking rates in 2022 will drive the price of gold higher. In addition to that, higher price of gold is supported by bullish technical developments across the daily and weekly time frames. However, we are cautious as we would like to see more confirmations of the uptrend. Because of that we will observe the price action very closely in the following days. Preferably, we would like to see gold holding up above the 1835 USD price tag. Though, we would not be surprised to see the price retrace back below this level before continuing higher. Additionally, we would like to see an increase in ADX which would further suggest that trend changed from neutral to bullish. We would like to change the medium-term price target of 1850 USD to short-term price target. Additionally, we would like to set a new medium-term price target for XAUUSD to 1875 USD.

Illustration 1.01

Illustration above shows the daily chart of XAUUSD. It also shows the upward moving channel. Preferably, we would like to see gold move within the boundaries of this upward moving channel. Breakout to the upside from this channel would further bolster the bullish case for gold.

Technical analysis - daily time frame
RSI continues to develop bullish structure. Same applies to MACD and Stochastic. DM+ and DM- are bullish as well. ADX contains low value which suggests that trend is neutral. Overall, the daily time frame is bullish.

Illustration 1.02

Picture above shows the daily chart of XAUUSD. It also shows the rectangle pattern and series of previous bullish and bearish breakouts.

Technical analysis - weekly time frame
RSI and MACD continue to increase which is bullish. Stochastic is neutral. DM+ and DM- are due to perform bullish crossover. ADX contains low value which suggests that a neutral trend is present. Overall, the weekly time frame is bullish.

Support and resistance
Immediate support/resistance lies at 1834.195 USD. Resistance 1 sits at 1877.14 USD and Support 1 lies at 1750 USD. Major resistance is at 2075.282 USD and major support is at 1676.866 USD.

Our latest idea on gold from 5th January 2022:

Here we layed out bullish case for gold and correctly predicted breakout above the resistance at 1835 USD.

Please feel free to express your own ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Your own due diligence is highly advised before entering trade.