Gold has been on edging lower after jumping last week following the Federal Reserve’s decision. Does it have more room to the downside? The precious metal’s positioning on the chart is unfavorable.
The Technical Confluences Indicator is showing that XAU/USD is facing resistance at $1,730, which is a cluster of lines including the Fibonacci 23.6% one-week, the Fibonacci 38.2% one-month, the Bolinger Band 4h-Middle, and the Fibonacci 61.8% one-day.
If gold overcomes this hurdle, the next upside target is $1,744, which is the convergence of the Fibonacci 23.6% one-month and the previous daily high.
Looking down, support awaits at $1,722, which is the confluence of the previous daily low, the Bollinger Band one-day Middle, and the SMA 5-one-day.
The next cushion is soft, at $1,717, where the SMA 200-4h and the SMA 10-one-day meet up.
All in all, the path of least resistance is down.
Here is how it looks on the tool:
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.
This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.
