The XAUUSD daily chart is currently showing a period of consolidation after the last leg lower to test 1635 area prior support. The 1635 area has multiple elements of confluence comprised of the following:
- 61.8% Fibonacci retrace,
- FE100 extension
- Previous resistance which subsequently became support in December 2012.
This technical level has proved to be a near term pivot for gold (XAUUSD) once again.
The current consolidation phase has gold trading between the aforementioned support lows and the 1680 area, which is loosely aligned with the 5/11/12 daily low, and marks a 50% corrective retrace of the swing from 1695 - 1625.
A sustained break under 1625 - the year to date low - would likely be viewed as a constructive technical development. Any extended downside price action would ultimately need to contend with the 1520 - 1530 area previous support which has held on three separate attempts to break lower since September 2011. A break under the 1522 area would be the lowest level since July 2007.
If the recent 1625 area lows hold, the upside scenario has the 1695 - 1700 handle as an initial technical area of interest, as this marks a prominent lower high from 2/1/13. Further to this is the key 1785 - 1800 area previous resistance.
Disclaimer: Any news, opinion, analysis, price quote or any other information should be taken as general market commentary only and not as advice to trade on. Omissions and errors may occur.
Copyright ForexAbode All rights reserved.