The pair XAUUSD sharply fell in the global market after hitting the major resistance level at 1366.037. The aggressive price action traders made a decent profit by shorting the XAUUSD pair with the bearish pin bar. However, the pair found some decent support at 1160.495 and started its bullish correction. The bulls managed to take control of the market from that level and pushed the pair towards the critical resistance level at 1346.558. The buyers again lose control of this market from that level and the price of XAUUSD drop towards the nearest support level at 1275.070. This level is going to play a crucial role for this pair since a break below this level will result in a sharp drop in the price of XAUUSD.
XAUUSD daily chart analysis
XAUUSD testing major support level at 1275.070
From the above figure, you can clearly see the price is testing the 38.2% bullish Fibonacci retracement level at 1275.070. Any bullish price action confirmation signal near that critical support level will be an excellent opportunity to execute fresh long orders. However, the leading analyst of the Forex trading industry is expecting bearish movement in the pair since the market failed to create series higher highs in the past few weeks. A daily closing of the price below the critical support level at 1275.070 will eventually lead this pair towards the next critical support level at 1250.87.
From that level, we might see some decent bullish bounce but in the absence of strong supportive candle below that level, buying the pair near the 1250.87 marks will be an immature act. If the sellers manage to break below this level, the pair will eventually test the 61.8% (1231.675) bullish retracement level. This level is going to provide a significant amount of support to this pair and any bullish price action confirmation signal will be an excellent opportunity to go long. On the contrary, a daily closing of the price below the 61.8% bullish retracement level will indicate the end of the medium-term bullish trend. This will eventually lead this pair towards the next critical support level at 1160.495.
Potential market movements
Currently, the pair is trading at a very critical level. If we get a buying opportunity based on bullish price action confirmation signal, there is a strong chance we will see another retest of the major resistance level at 1346.558. Breaking above that level will be a tough challenge for the bulls since we have plenty of resistance candles. However, a clear break of the critical resistance level at 1346.558 will confirm the temporary bottom formation of this pair at 1160.495. Once we have a temporary bottom in place, the buyers will eventually target the key resistance level at 1374.35. Breaking above this level will be extremely hard for the XAUUSD pair.
Considering all the technical parameters, it’s better to wait in the sideline until the market gives up a more favorable trading opportunity. But the traders should never execute any short orders as long as the 61.8% bullish retracement level holds.
First published here: http://j.mp/2Dojxot
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