XAU/USD: technical analysis 01.05.20

Current trend

XAU/USD quotes are consolidating around the 1687.50 level after a significant decline over the past two days. According to the technical indicators, the pair has the potential to further decline. The decisive breakdown of 1681.17 is needed to indicate the downward trend resumption. In this case, the next targets of sellers will be the level of 1676.00-1671.88. However, oversold Stochastic conditions on the H4 chart and strong support level 1687.50 could challenge the pair’s plunge.

Alternative scenario

The upward rebound from 1687.50 and pullback above 1691.50 will be a sign of the upward correction formation and let the price grow to the area of 1695.31 resistance. Should prices continue growing above it, the area of 1703.13 level can prevent the instrument from growing as the key target of the correction.

Technical indicators

Technical indicators mostly keep a sell signal, but the upward correction is possible in the short term.

Bollinger Bands are diverging on the background of bullish momentum.

MACD is growing in the negative zone.

Stochastic is in the oversold area and is pointed upwards, reflecting the high possibility of upward movement formation.

Support and resistance

Support levels: 1681.17, 1676.00, 1671.88, 1687.50.
Resistance levels: 1691.50, 1695.31, 1703.13.

Trading recommendations

Short positions can be opened below the level of 1681.17 with the target at around 1676.00 and stop-loss at 1682.47.
Long positions can be opened above the level of 1691.50 with the target at around 1696.00 and stop-loss at 1690.00.

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