Gold Consolidating with Lower Highs and Higher Lows, Breakout Expected Soon
Gold has been trading within a narrow range over the past week, attempting to breach the 1980 level a couple of times but failing to sustain. While it did achieve 2010, not a single candle closed above the 2000 level. This pattern indicates a consolidation phase with lower highs and higher lows, which typically leads to a breakout. The direction of the breakout is yet to be determined.
In this article, we will analyze the XAU/USD technical analysis and forecast for the week of May 1-5, 2023, and explore how to profit from trading gold.
Analyzing Gold's Movement
There was a triple bottom, followed by a rise, consolidation, and then another breakout. After that, it retraced again and formed a double bottom, followed by another rally. Now, it is attempting to consolidate again. However, it has shown a breakout from the bullish channel, indicating a clear case of higher lows and lower highs. Once it breaks past the 2020 level, another round of rise can be expected, taking it towards 2050-2075 levels.
Looking at the last few candles, the first two were of retracement, and the last one was of consolidation. Once it stays above 2000, buying next week is a possibility, but wait for the 2005-2010 levels to be breached. Once it sustains above 2010, it will gain more bullish momentum, and a rise towards 2020 and 2050 levels can be expected.
On the downside, a breakout below the 1980 level may occur. On the daily charts, a close below 1980 is necessary next week. Once it closes below 1980, a good bearish momentum is expected. However, be cautious, as if we connect the lines on a larger scale, it is still bullish in the larger channel. The support is expected at 1950, 1940, and then 1900 levels.
Weekly Chart Analysis
On the weekly charts, we can consider the recent candle as a reversal sign, with a sharp tail, indicating downward pressure. However, there are two candles in consolidation with lower highs and higher lows, indicating an expected breakout. If it breaks below the 1980 and 1970 levels, we can expect a reversal and further drop. However, as long as it stays within the channel, once it breaks out the pivot of the median of the channel, 2010, we can expect a rise towards 2050 levels.
Entry levels:
Buy once gold stays above 2000 level
Wait for the 2005-2010 levels to be breached
Look for a breakout past the 2020 level
Exit levels:
Sell if gold breaks below the 1980 level on daily charts
Take profit at 2010-2020 levels on the upside
Consider support levels at 1950, 1940, and 1900
Conclusion
Gold is currently consolidating with lower highs and higher lows, and a breakout is expected soon. To profit from trading gold, wait for it to give a breakout. The levels on the upside are 2010-2020, and on the downside, 1970-1980 levels. Be careful and consider the support levels of 1950, 1940, and 1900, as they may come into play. In the long term, a rise towards 2050-2075 levels is expected.
Disclaimer: The information provided in this article is for educational and informational purposes only and should not be considered as investment advice.
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