Gold (XAU/USD) Price Forecast: Resistance Test Builds Breakout Pressure

Tight Range Beneath Resistance

Gold has been pushing up against resistance near the 20-day moving average for five days, including Tuesday. Another dip to test support near the 10-day moving average occurred with Tuesday’s two-day low of $4,608. Short-term support has been marked by the 10-day average since it was reclaimed decisively a week ago, concurrent with a reclaim of the 100-day moving average. A lower swing high of $4,800 resulted, confirming immediate dynamic resistance near the 20-day line.

Moving Average Tension and Confluence Zone

The 20-day moving average is reflecting ongoing selling pressure, while the 10-day moving average signals rising demand as buyers become more aggressive. Notice that the 10-day average recently turned up and that resistance from the 20-day average is validated by the 50% retracement at $4,746, the upper boundary of a rising trend channel, and the 100-day average at $4,663. This confluence adds to the potential significance of the zone. Although upward pressure remains evident, a bullish continuation is anticipated. However, the short-term outlook would shift on a sustained decline below the five-day low of $4,554.

Second Leg Advance Targets Higher Symmetry

The price of gold has been moving higher in a second leg up from the recent $4,099 low. That low is significant, as support was found near the long-term trend indicator, the 200-day moving average, now at $4,159. An initial measured move target for gold is indicated around $4,874, where the second leg up (AB) matches the first leg up (CD) from the bottom. Once there is symmetry in the price change, a potential pivot is identified. Consequently, the pattern along with recent bullish price behavior, supports the potential for an upside breakout. The ABCD target is joined by the 61.8% Fibonacci retracement level at $4,902.

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