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Gold (XAU/USD) is licking its wounds after Wednesday’s 1% sell-off induced by the optimism over the coronavirus vaccine developments, with the US FDA set to approve Pfizer covid vaccine later this Thursday.  

Expectations of additional fiscal stimulus from both sides of the Atlantic keep the gold buyers hopeful.  Ongoing negotiations between the Democrats and Republicans around an aid package worth around $900 billion could likely continue, especially after House lawmakers voted to pass a one-week stopgap funding bill.

However, jittery markets amidst an elusive Brexit agreement and looming EU budgetary talks could re-ignite the haven demand for the US dollar, capping the recovery in gold.

How is gold positioned technically?

The Technical Confluences Indicator shows that the XAU/USD pair is batting a critical hurdle at $1842, which is the convergence of the Fibonacci 38.2% one-month and SMA5 four-hour.

The next relevant barrier is seen around $1845, which is the Fibonacci 38.2% one-day.

The previous week high of $1848 could challenge the XAU bulls further out. A firm break above the latter could expose the $1854 barrier, where the Fibonacci 61.8% one-day coincides with the SMA10 four-hour.

To the downside, an immediate cap is aligned at $1836, the convergence of the Fibonacci 23.6% one-day and SMA10 one-hour.

The sellers will then target the $1829 cushion, the intersection of the Fibonacci 23.6% one-week and SMA200 one-hour.

Further south, the $1819 is the level to beat for the bears. That level is the Pivot Point one-day S1.

Here is how it looks on the tool


About Confluence Detector

The TCI (Technical Confluences Indicator) 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