XAU/USD traded higher today after it hit support at 1835, fractionally below the upside support line drawn from the low of Aug. 9. The fact that the metal remains above that line keeps the chances for another wave north intact. However, given the proximity to that line, we prefer to take the sidelines for now. We would like to see a clear break above 1915 before examining whether the bulls have gained complete control again.
That territory acted as a key support between Mar. 15 and Apr. 7 and its break may encourage more bulls to enter the action. The next stop may be at 1965, marked by the high of Mar. 24, the break of which could extend the advance towards the round figure of 2000, near the high of Apr. 18.
If that barrier cannot halt the rise either, then we may experience extensions towards the 2075 zone, which is the metal’s record high, marked by the high of Aug. 2, 2020, and slightly above the peak of Mar. 6, this year.
Looking at our short-term oscillators, we see that the RSI rebounded from near its 30 line, but the MACD remains below both its zero and trigger lines. That’s another reason we prefer to stay sidelined for now and wait for a break above 1915 before we get more confident on an uptrend continuation.
On the downside, we will start examining the bearish case upon a dip below 1820, a support marked near the inside swing high of January 30th. This could also confirm the break below the upside support line drawn from the low of Aug. 9.
The next support may come at 1783, marked by the lows of Jan. 2 and 23, the break of which could carry extensions towards the lows of Oct. 31 and Dec. 12, at 1754. If that barrier doesn’t hold either, we may see the sellers diving towards the low of Sept. 26, at 1722.
