Review and dynamics
After reaching the highs of 1350.00 at the beginning of September, pair XAU/USD has been steadily declining in the descending channel on the daily chart with the lower border near the level of 1300.00. The pair has broken out important support level of 1324.00 (Fibonacci 38.2% to the decline since October 2012 and ЕМА50 on the daily chart). The bottom line of the ascending channel on the weekly chart goes near this level. With the opening of today’s trading, the pair XAU/USD has been growing. However, the rise in the pair can be considered as the short-term upward correction amid the decline in the USD in currency market on Monday.
On the daily chart the pair XAU/USD is in a descending channel with the upper limit near the level of 1350.00 (highs of September) and the lower limit at 1300.00. On the weekly chart the pair XAU/USD has broken down the lower limit of the ascending channel. The upper limit of the channel goes above the level 1410.0 (Fibonacci 50.0%).
On the weekly and daily charts, the indicators OsMA and Stochastic give medium-term signals to sell. On the 4- hour and monthly charts the indicators also give signals for short positions.
Further movement in the pair XAU/USD will mostly depend on the US Fed policy until the end of the year. If the Fed's comments will indicate probability of monetary policy tightening, the USD will gain strong positive momentum, while the gold prices will decrease, and Vice versa. If the Fed's policy remain soft, gold will gain support, which will be also added by the tendency of some of the world's Central Banks to introduce soft monetary policy.
The decline in the pair XAU/USD will be possible after breakout of the support level of 1300.00. The decline may reach the levels of 1285.00 (ЕМА144 on the daily chart), 1265.00 (ЕМА200 on weekly and daily charts) and 1252.00 (ЕМА144 on the weekly chart). Consolidation of the price below the level of 1218.00 (Fibonacci 23.6%) may trigger further decrease in pair XAU/USD and resumption of the downtrend, which began in October 2012.
Consolidation of the price above the local resistance level of 1350.00 will increase probability of further growth; breakout above the levels of 1365.00 and 1385.00 may trigger further rise in gold price up to $1400.00 per ounce.
Support levels: 1300.00, 1285.00, 1265.00, 1252.00 and 1218.00.
Resistance levels: 1324.00, 1332.00, 1350.00, 1370.00, 1385.00, 1400.00, 1410.00 and 1435.00.
Buy Stop: 1335.00. Stop-Loss: 1328.00. Targets: 1350.00, 1365.00, 1385.00, 1400.00, 1410.00 and 1435.00.
Sell on the market. Stop-Loss: 1322.00. Targets: 1300.00, 1285.00, 1265.00, 1252.00 and 1218.00.
Breakout of the level of 1324.00
Indicators are reversing towards the short positions