Missed gold’s breakout above a key resistance zone?
This precious metal could still be in for a correction to the area of interest on the 4-hour time frame!
Take a look at these potential support areas marked by the Fibonacci retracement tool.
Gold (XAU/USD) 4-hour Forex Chart by TradingView
Safe-haven flows have lifted gold past the strong resistance zone around the $2,700 mark, taking it all the way up to the next ceiling near R2 ($2,762.87) before pausing on its climb.
Investors still seem pretty anxious about Trump’s first few days in office, as the newly sworn-in President has been threatening higher tariffs left and right, keeping global trade jitters present.
Can the precious metal extend its rallies as more traders flock to safety?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on gold and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
An ascending trend line has been connecting XAU/USD lows since the start of this year, and it looks like a quick pullback to this support zone could follow.
This is right in line with the 61.8% Fibonacci retracement level and the former resistance at $2,700, so look out for a pickup in buying interest at this region. A shallow pullback could already find buyers at the 50% Fib near R1 ($2,733.01) or the 38.2% Fib at $2,734.23 so keep your eyes peeled for reversal candlesticks at these levels, too!
Note that the 100 SMA crossed above the 200 SMA to suggest that the uptrend is more likely to resume than to reverse. If any of the Fibs are able to keep losses in check, gold bulls could set their sights back on the upside targets at the swing high or to fresh ones at R3 ($2,800.96).
On the other hand, a break below the Fibs and trend line could suggest that a reversal from the short-term uptrend is due. Watch out for a drop to the next bearish targets at S1 ($2,665.06) near the dynamic support at the moving averages then S2 ($2,626.97) in this case.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
