Spot Gold (XAU/USD) is testing the upper bounds of the recent bearish trend!
Will the precious metal continue to lose pips against the US dollar?
Or will we see a hack this week?
Gold (XAU/USD) 4 hours Planned by TV
If you have been watching spot gold lately, you will know that XAU/USD has been making lower highs and lower lows since May when the pair found resistance at the $2040 region.
XAU/USD took a downtrend reaching $1900 but there seems to be enough buyers in the area to encourage a first touch bounce.
Will XAU/USD Retest the $1900 Lows?
The pair is currently touching $1,930 levels, which is not too far from the top of the descending channel and the 200 SMA on the 4-hour time frame. Moreover, the current levels of XAU/USD are also close to the 50% Fibonacci retracement of the June Bearish Swing!
A short trade at $1,930-$1,940 would produce a good risk ratio especially if XAU/USD posts fresh July lows below $1,900 without breaking the 200 SMA.
The previous low of $1,900 is a good initial target, but you can also aim for fresh monthly lows if there is enough bearish momentum.
Do you feel that XAU/USD is constrained for a bullish breakout instead?
You can wait for a clear break above the channel or the 200 SMA before targeting prior areas of interest such as $1,970 or $2,000.