Gold Price Analysis: Recapturing $1891 critical for XAU/USD bulls, levels to watch – Confluence Detector

Dhwani Mehta FXStreet

Gold (XAU/USD) is trying hard to extend its recovery from six-week lows of $1850, reached after the coronavirus vaccine optimism negated the immediate need for fiscal and monetary stimulus.

However, the continued escalation in the COVID-19 cases in Europe and the US has revived the calls for additional stimulus, in a bid to support the global economic recovery, which eventually underpins the sentiment around gold. With the US observing Veterans Day, thin trading conditions could exaggerate the moves in the bright metal.

Gold: Key resistances and supports

Despite the upbeat momentum, the Technical Confluences Indicator shows that the yellow metal is struggling below the minor resistance at $1888, which is the Fibonacci 38.2% one-month.

The next critical resistance is aligned at $1891, the meeting point of the previous day high and pivot point one-day R1 at $1897 could likely challenge the bull’s commitment.

Further up, the $1903 barrier is the level to beat for the bulls. That level is the intersection of the SMA100 one-day, SMA200 four-hour and Bollinger Band one-day Middle.

Meanwhile, the bullish bias could likely remain intact so long as the bulls hold above the powerful support at $1878, the confluence of the Fibonacci 23.6% one-month and Fibonacci 38.2% one-day.

A break below which will expose the next strong cap at $1873, which is the previous week low. A sharp drop towards the $1860 level (previous month low) cannot be ruled out if the bears fight back complete control.

Here is how it looks on the tool

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

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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