Gold Price Analysis: XAU/USD braces for a bumpy road to recovery above $1775 – Confluence Detector

Dhwani Mehta FXStreet

Gold (XAU/USD) is making another recovery attempt from five-month lows of $1765 as the US dollar dips on improved market mood amid coronavirus vaccine and US stimulus hopes. US Treasury Secretary Steve Mnuchin’s push for utilizing $455 billion from the CARES Act also bodes well for gold.

Although, gold’s corrective advance could lose steam, in the wake of hopes for an imminent vaccine rollout. Optimism over a swift vaccine-driven economic recovery diminishes gold’s attractiveness as a safe-haven. Focus shifts to the US data dump and Fed Chair Powell’s testimony.

How is gold positioned on the price charts?

Gold: Key resistances and supports

The Technical Confluences Indicator shows that the XAU/USD pair shows that the bright metal is looking to extend its recovery towards the critical $1800 level, which is the convergence of the Fibonacci 23.6% one-week, SMA100 one-hour and SMA200 one-day.

On its way to the abovementioned barrier, gold is likely to face strong offers around $1790, which is a cluster of dense resistance levels, comprising of the previous day high and Pivot Point one-day R1.

To the downside, an immediate cushion is seen at $1778, where the SMA5 four-hour coincides with the previous low on one-hour.

Further down, the earlier powerful resistance now support at $1775 could be challenged. That level is the intersection of the Fibonacci 38.2% one-day and the previous week low.

The next soft cap awaits at $1770, the convergence of the Fibonacci 23.6% one-day and Bollinger Band one-day Lower.

The confluence of the Pivot Point one-day S1, Bollinger Band four-hour Lower and previous day low at $1765 is the last resort for the XAU bulls.

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

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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