Overview
XAUUSD started the week on October 14 with a noticeable gap down, opening lower after a strong rally last week. This gap highlights a potential shift in momentum, especially given the technical factors observed on the H4 time frame. The 100-period SMA has crossed above the 50-period SMA, signaling a possible trend change or continuation of the upward movement seen in previous sessions.
Technical Analysis
Gap Down: The market opened with a gap down around the 2,645 - 2,655 price zone, where the current price has since recovered back towards 2,661. Gap-downs in quiet fundamental weeks often hint at market indecision or technical-driven moves. Traders will be watching to see if this gap is filled (continuing the upward momentum) or if it acts as a resistance zone, pushing prices lower.
Moving Average Setup
The 100-period SMA crossing above the 50-period SMA is generally considered a bullish signal, indicating that the market may be entering an upward phase. However, given the gap down and the location of price action just below key resistance levels, caution is warranted as the price could consolidate or retest lower support levels.
Support Levels: The key support level to watch this week lies around 2,640, where price bounced after the gap down. This level coincides with the 50 SMA, which could act as dynamic support.
Resistance Levels: Immediate resistance lies around 2,675 - 2,680, near previous highs. The ability of price to close above this zone would indicate further upside.
Fundamental Context
This week is relatively light in terms of significant fundamental news releases, which means technical analysis will likely dominate price action in XAUUSD. The absence of major economic data could reduce volatility, allowing gold to follow the technical patterns more closely. However, traders should remain alert for any sudden geopolitical or macroeconomic developments that could influence market sentiment unexpectedly.
Outlook for the Week
Bullish Case: If the gap is filled and the price closes above 2,675, there could be further bullish momentum, with targets towards the 2,700 zone and above. The moving average crossover also favors this outlook, but confirmation from a breakout is key.
Bearish Case: If the price fails to hold above the 2,640 support and breaks lower, the gap down could signal the start of a correction. In that case, the next significant support would be around 2,620 and potentially lower at 2,600 if bearish pressure builds.
In summary, while the gap down signals short-term uncertainty, the moving average crossover suggests potential for continued upside if resistance is broken. Traders should watch for price action around the 2,675 resistance and 2,640 support levels to guide their strategies this week.
Disclaimer
The analysis provided above is for informational purposes only and should not be construed as financial or investment advice.
