On Monday the yellow metal's price declined down below all notable support levels on the hourly chart.
The move was unexpected from a technical analysis perspective, as the pair had surged above many resistance levels, signalling a surge and triggering the stop losses of short positions.
This week will be busy for macroeconomic data releases. With the exception of Tuesday, on each day there is a notable data release.
However, take into account that on Tuesday the heads of Bank of England and the US Federal Reserve will speak publicly. UK's Governor Carney will speak at 13:00 GMT and the head of the Federal Reserve Jerome Powell is set to speak at 17:45 GMT.
On Wednesday, at 09:30 GMT the UK CPI will be released. Later on at 13:30 GMT the US CPI and Core CPI will be released.
On Thursday, at 13:30 GMT the US Retail Sales and Core Retail Sales data will be published. In addition, at the same time the US Producers Price Index will be released.
The week will be closed by a UK data release. Namely, the UK Retail Sales data will be published at 09:30 GMT.
All of these events are scheduled to be covered by Dukascopy Analytics on our Dukascopy Webinars YouTube channel. The streams start ten minutes before the data release.
XAU/USD short term forecast
The yellow metal's price managed to break the resistance of simple moving hourly averages on Friday. However, on Monday the metal's price ignored the support of these levels and declined down to 1,310.00.
Making forecasts for the commodity price at the moment is rather complicated. In general, watch the price action near each of the simple moving averages and the pivot point level at 1,308.45.
If the PP gets passed, a decline should occur. On the other hand a step by step passing of the SMAs might result in a surge up to the 1,320.00 level.
Hourly Chart
A new pattern has been added to the daily chart and old patterns were deleted. Note that it is a simple ascending channel pattern, which captures the surge of the yellow metal that has been occurring since November.If the pattern manages to guide the commodity price higher, by the start of April, the commodity price should trade above the 1,350.00 level. Although, on its way upwards the metal will face various monthly pivot points.
Meanwhile, all simple moving daily averages are far below the metal, indicating that it is overbought.
Daily Chart
Short sentiment remains intact
By the middle of Friday's trading 67% of traders were short on gold. On Monday, the sentiment had not changed.
This indicates that the stop losses of these traders were not triggered. Instead they must have given them "room to breathe."
However, it was previously noticed that there either are no stop losses, or there are additional traders prepared to short the commodity in case of a decline. The sentiment might be unchanged due to a combination of these two hypothesis.
In the meantime, trader pending orders in the 1000-base point range were no longer neutral. Instead 65% of orders are set to buy.
This indicates that at this moment the short positons have their close by stop losses and/or take profits close by.