Gold has had a monster run against the Greenback in November, but is the top in place ahead of the turn of the month?
XAU/USD 1-Hour Forex Chart by TradingView
U.S. dollar weakness has been the story of November, lifting Dollar denominated assets like gold, which is now up over a solid 3% since the end of October.
But the $2,050 level could be the top for gold for now, as we do see a potential double top chart pattern forming on the one hour chart above. Will this draw in sellers and/or end-of-month profit takers?
Remember that directional biases and volatility conditions for market price are typically driven by fundamentals, and if you haven’t done your fundie homework yet on Gold or the U.S. dollar yet, then it’s time to do some work by checking out the forex calendar and stay updated on daily fundamental news!
If you have done your fundies homework, and you’re fundamentally bearish on the yellow metal, then you may not have to wait a bit before trying to make a counter trend play.
Again, we can see a double top formation in the works and if does play out, then that may draw in technical sellers on XAU/USD.
This could bring the market lower this week, along with bullish USD drivers, and if so, the next support area to watch is the potential area of interest highlighted on the chart above. Countertrend plays tend to be low probability setups, but it’s something to consider for you gold bears out there.
On the 1-hour chart above, we can see a technical confluence between the rising ‘lows’ trendline, rising moving averages and broken resistance levels between $2,000 – $2,020. All put together, this area may draw in technical based orders, with buyers potentially outweighing the sellers looking to swing play the uptrend.
So if you’re fundamentally bullish on gold, this may be the area to watch for bullish reversal patterns to develop before working on a long risk management plan.
And of course, if the market breaks this area to the downside and holds, further long profit taking and/or fresh shorts may jump on a potential new trend lower, again depending on what the fundamentals are telling traders.
Now, the daily average true range of around $20 makes this last scenario a low probability occurrence, but for this week, but if you’re a bear, it’s another technical trigger to watch out for in case the Greenback finds a reason to take back its losses.
But what do you think? We love to hear everyone’s ideas so feel free to drop a comment below and share your thoughts!
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