Retracement level support is at $4,541.88, $4,495.33 and $4,401.84. Retracement level resistance is $4,744.34, $4,850.68 and $5,028.04.
The long-term support is being supplied by the 200-day moving average at $4,301.90. The short-term resistance is the 50-day moving average at $4,790.70.
What have we seen this week? Spot Gold (XAUUSD) found support at $4,501.04, just above the 50% level at $4,495.33. It also held $4,481.78, which is the line that separates the bull market from the bear market. The final support is a 61.8% level at $4,401.84. Putting it all together, buyers came in to defend against the start of a bear market and a 200-day moving average breakdown.
Traders found resistance at a 50% level at $4,744.34, just below the 50-day moving average at $4,790.69, a 50% level at $4,850.68, a swing top at $4,891.54 and a Fibonacci level at $5,028.04.
Putting it all together, the bears are likely to continue to sell rallies and the bulls will start playing for a 50-day moving average breakout. We need a break in the pattern. In mid-April, we saw traders selling strength, and three weeks later, they were buying weakness.
The 50-day and the 200-day MAs are going to continue to compress prices until traders start buying strength or selling weakness.
What I’m Watching
The 50-day moving average at $4,790.70 is the level that decides whether Thursday’s session was a step forward or just noise. Gold touched $4,764.01 and backed off. That is $26 below the 50-day. Getting there is one thing. The price action when it actually touches that level is what I am watching. A clean push through opens the door to the retracement zone at $4,850.68 to $5,028.04 and that is where the real breakout conversation starts. A stall and the range trade reasserts itself.
Friday tells me which version this is. Soft payrolls and the 50-day gets tested fast. Strong payrolls and the late-session reversal Thursday turns into a bigger problem. The value zone at $4,495.33 to $4,401.84 held this week and buyers showed up where they were supposed to. That foundation is intact. Whether the active buyers are ready to take out offers above the 50-day is a different question and Friday’s number is the one that answers it.
If you’d like to know more about how to trade gold, please visit our educational area.
www.fxempire.com