Gold is nearing overbought & smart money going short -> Is the breakdown on the horizon? Weekly XAU/USD analysis + forecast
Hello, fellow traders!
Gold reached a new all-time high above $2,620 as the US Dollar weakened following the Federal Reserve's significant 50 basis point rate cut. Although Gold is nearing overbought levels, the overall bullish trend remains strong.
Ongoing recession concerns, economic weakness in the EU, and rising geopolitical risks continue to support demand for the precious metal.
In this week’s update, I’ll:
Analyze the latest technical indicators of XAU/USD and what they mean for potential future price action.
Highlight the recent key support and resistance levels.
Break down this week’s key economic data and Gold buying trends from around the world and how it might affect XAU/USD in the mid term.
Explain the latest shift in the market sentiment as to the COT report and what it means for Gold's outlook.
Share my short-term and mid-term predictions on XAU/USD price action and trajectory.
📊 Let’s look at the technical data
Last 6 months - 2h charts
The Stochastic RSI and CCI are currently in the overbought zone - a sign that Gold might be overextended in the short term.
The regular RSI is getting close to being overbought, but it’s not quite there yet. The upward momentum could continue for a while longer before any major reversal.
Despite short-term overbought signals, the general uptrend is still strong.
The rising price channel, consistent volume, and RSI above 50 suggest that buyers are still in control.
If the pullback happens, I don’t expect it to break the broader uptrend unless we see RSI drop below 40 or CCI plunge into negative territory.
Price is trading well above the MA $2,595, meaning the uptrend has strong support below it, making $2,595-$2,600 a critical support zone.
The MACD is showing signs of an upward crossover, which is typically a bullish signal. The MACD has been oscillating in a fairly narrow range for the past few months, which suggests that while momentum is positive, the moves aren’t explosive. This indicates a steady, sustainable upward trend.
In conjunction with the Stochastic RSI, which showed overbought conditions, the MACD suggests that momentum is still on the bullish side, but we need to
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