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XAUUSD TECHNICAL ANALYSIS

  

US Non-Farm Payrolls  

The US non-farm payrolls data for July is due this Friday; the Bureau of Labor Statistics published 850,000 employed workers for June, which was better than the forecasted 700,000. Non-Farm payroll is a measure of the change in the number of employed people, excluding farmworkers. 

This report is an indication of job creation in the country and is an essential indicator of the economy’s health.

There are a few critical fundamental indicators this week that could affect the USD. Before the NFP release is the weekly US Initial jobless claims report, which has been negative for July. The initial jobless claims show the number of people filing for unemployment insurance, and this data, if consistently negative, does have an impact on NFP.  

A positive NFP report could be bullish for the USD, while a lower-than-expected number could be bearish for the USD. This week’s focus is on Gold, and historically there has been no long-term correlation between the precious metal and NFP data. NFP is due Friday 6 August, 14:30 GMT+2 

XAU/USD Technical Analysis For The Daily Time Frame

Average true range ( ATR)

As of the time of writing this market analysis, the total volatility of the market was neutral as the investors and traders seem to wait for the NFP report. The market will be very volatile and can change the overall direction of the US dollar followed by XAU/USD.

Relative strength index (RSI)

The RSI indicator can still been seen in the middle of the overbought and oversold area. It is hitting the level 60 but as the market movement in the daily time frame is still bearish, the RSI can be seen touching the 40. The main direction and the price trading will be dependent on the NFP news on Friday. But as for now it is better to wait for the trade setup to identify the market’s oversold and overbought zone.

Technical Analysis using Price Action:

Using the top-down multi time frame for technical analysis, followed by 4hr and 30min for rejection and trade execution in the daily time.

The overall gold market was bearish, meaning the prices were heading down. XAU/USD was also seen following the trendline and bouncing back down from the 1918 zone.

The price was near the 1670 support zone in mid-March. Moving forward the prices tried moving up after touching the zone twice forming a new support at 1760 in mid-June. The market seems not to have enough buying momentum and was able to collect just close to 70 pips in the whole month of July.

The buyers were successful in breaking the new high at 1795.45 and then made a new swing low at 1790.63. Market then again rallied to break the swing high but failed. The whole analysis at daily time frame seems Gold prices are still not at the bullish side. The NFP report on Friday hereby can boost market direction on one side.

However, the main technical analysis indicator that serves as the term in which a trading decision is made is based on the candlestick pattern noticed on the price chart, as we can see a lot of candle with rejection stating the market is not biased in any one direction. And to further have profitable trades in the coming weeks, a critical observation must be placed on the recent price pattern and the fundamental news effects.

  • First  resistance point is 1827.54
  • Second resistance point is 1832.87
  • Third resistance point 1916
  • First support point is 1789.63
  • Second support point is 1757.49
  • Third support point is 1677.73

This marked resistance and support levels should be used as an entry or exit point trading motive when approaching the market in the future market openings.

XAU/USD Technical Analysis For The 4-Hour Time Frame

In the 4hr time frame, the price was seen holding between support zone 1860.82 – 1676.82. Price was not able to break the previous swing low and was seen moving up, but a clear indication also to keep in mind is that the price was not also able to break the high. The best move right now for the traders in the short-term would be to wait for the break of either recent swing low or high with a momentum. If the price breaks below at 1760.00 support zone, then it shall be a potential sell signal. 

Also, if the price breaks the resistance at 1918.00 trendline with a bullish momentum you can look for a potential buy short-term. Waiting for the retest of the support level is something to keep in mind for a better risk-reward ratio.

Key Trading Recommendation 

As NFP is news that every trader and investor have their eyes on, waiting for the right move would always be the best risk management strategy. Although a large number of traders would not place their trades before the news you too can consider doing the same.


Vantage does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Vantage, reproduction or redistribution of this information is not permitted.

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