Gold (XAU/USD) Weekly Outlook (8/4 – 8/8)

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Gold (XAU/USD) Weekly Outlook (8/4 - 8/8)

Gold continues to trade in a falling wedge pattern. This can be an important week for gold because of all the central bank statements. We will have the Bank of England and European Central Bank statements on Thursday, followed by the Bank of Japan and Reserve Bank of Australia Statements on Friday. A collectively dovish week of central bank policy announcements would be strong for XAU/USD, while the vice versa should be true.

Gold (XAU/USD) 4H Chart 8/4

xauusd gold 8/4 4h chart

(click to enlarge)

Here are a a few scenarios for gold after the dust settles from the central bank risk events.

1) A break above 1310, and a hold above 1300: This would reflect a bullish breakout with confirmation (if price can stay north of 1300). Also, look for the 4H RSI reading to pop up above 60, and preferably tag 70. This bullish signal would open up the July high around 1345.

2) If the breakout above 1310 is followed by a dip back below 30, and the RSI dips back below 40, we should have bearish continuation toward the 1270 area.

3) If price never breaks above the falling wedge and instead continues the pattern of lower highs and lower lows, the 1270 area will be important. The daily chart shows that around this area (XAU/USD) would be testing a rising trendline and a previous support area. A break below 1260 should provide a clear breakout scenario and focus the market back down toward the 1200 handle.

Gold (XAU/USD) Daily Chart 8/4
gold 8/4 2014

(click to enlarge)

There are a couple of things you should notice in the daily chart:
1) The market is in a triangle.
2) Within this sideways mode, price has some short-term bullish bias because the RSI has tagged above 70 and has held above 40, turning up now.
3) If price can start holding north of 1300, it would trade above the cluster of 200-, 100-, and 50-day simple moving averages, which would reflect bullish bias as well.
4)  A break below 1260 should first open up the 1240.50 low. Below 1240, price is poised to test the 1200, and perhaps the 2014-low around 1182.50.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.