At mid-day on Wednesday, the support of the 23.60% Fibonacci retracement level and the 55-hour simple moving average failed to keep the price for gold up. By the middle of the day's US trading hours, the commodity had passed below the 100-hour SMA and reached the support of the 1,840.00 mark.
The 1,840.00 mark paused the price's decline and even caused a retracement back up to the 100-hour SMA and the near 1,850.00 level.
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XAU/USD short-term forecast
In the near term future, the metal's price had three scenarios. The first one was the most simple one, as the metal could continue to trade sideways between the 1,840.00 and 1,850.00 levels.
In the scenario of the 1,840.00 level's support failing, the rate should decline to the support zone that is located from 1,827.00 to 1,825.00. In addition, this zone is strengthened by the support of the 200-hour simple moving average near 1,826.90.
On the other hand, if the price passed the resistance of the 1,850.00 level, which is strengthened by the 100-hour SMA, the metal should would test the resistance of the 55-hour SMA and the 23.60% Fibonacci retracement level at 1,860.00. If these levels fail to hold, the 1,875.00 mark would once again be reached.
Hourly Chart
On the daily candle chart, the yellow metal has bounced off the resistance of the 55-day simple moving average. Moreover, it is retracing down after surging from the support of a large scale channel down pattern near the 1,765.00 level.
In theory, the metal should once again test the resistance of the 55-day simple moving average. This technical level should be passed before advancing onto the 1,900.00 mark.
In the meantime note that the metal is finding additional support in the 38.20% Fibonacci retracement of the 2020 high and low levels at 1,837.43.
Daily Candle Chart
Traders take profit
On Wednesday, on the Swiss Foreign Exchange the sentiment was bullish, as of total open position volume 62% was long. This sentiment was reached on Tuesday when traders took profits from the surge.
The sentiment was 66% long on Monday.
Meanwhile, in the 1000-pip range around the metal's price the pending orders were 88% to buy the metal.