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Gold (XAU/USD) attempts a dead cat bounce towards $1900, having witnessed a massive turnaround on Monday. The metal slumped almost 5% to six-week lows at $1850 after Pfizer Inc’s COVID-19 vaccine trial success alongside other companies’ likely vaccine approval revived hopes of a solid global economic recovery.

The vaccine optimism led markets to rethink the need for a fiscal and monetary policy stimulus, thereby, boding ill for the inflation-hedge, gold. Further, the risk-on rally in the global stocks lifted the Treasury yields, which in turn, powered the dollar bulls.

How is gold positioned technically?

Gold: Key resistances and supports

The Technical Confluences Indicator shows that the yellow metal’s recovery ran into fresh offers below the $1889 barrier, which is the Fibonacci 38.2% one-month.

A break above which the immediate cap appears at $1891. Follow-through buying interest could prompt the bulls to take on the significant resistance at $1902, the confluence of the SMA200 four-hour, SMA100 and 10 one-day.

Meanwhile, a dense cluster of healthy resistance levels around $1906 will be put to test if the buyers regain control. That level is the meeting point of the Fibonacci 61.8% one-month and one-week.

To the downside, strong support awaits at $1878, where the Fibonacci 23.6% one-month and one-day coincide with the Bollinger Band 15-minutes Middle.

A failure to hold above the latter could expose the minor cap at $1873, the previous week low.

A sharp decline cannot be ruled out on an acceptance below the aforesaid level, opening floors for a test of the previous month low at $1860.

Further south, a test of the $1849 September 28 low remains on the cards.

Here is how it looks on the tool

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About Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

Learn more about Technical Confluence