After reaching above the 1,905.00 mark, the yellow metal's price plummeted on Monday morning, as it reached back to the support of the 200-hour simple moving average at 1,855.58. From that level, the rate retraced back up to trade between the support of the 100-hour SMA and the resistance of the 55-hour SMA.
Future forecasts were based upon which of the SMAs manages to hold out longer.
The week of Christmas is set to have an early market closing on Thursday in many countries and reduced liquidity due to people being on holidays.
Namely, on Tuesday, the US Final GDP could cause volatility. Last but not least, on Thursday, the US Durable Goods Orders and Core Durable Goods Orders data will be released. All of the data releases of the week are scheduled to occur on 13:30 GMT.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
XAU/USD short-term forecast
In the case of the resistance of the 55-hour simple moving average failing to provide enough resistance for the price to decline, the metal would once again test the 1,900.00 level.
On the other hand, the rate could pass the support of the 100-hour SM, which was located near the 1,870.00 mark. If this level gets passed, the rate would look for support in the combination of the 23.60% Fibonacci retracement level at 1,860.60 and the 200-hour simple moving average at 1,855.58.
Hourly Chart
On the daily candle chart, the yellow metal has passed the resistance of the 55-day simple moving average, which kept the bullion down since early December. Next resistance on the daily candle chart was the 100-day SMA, which was located at the 1,906.25 level. This SMA could move lower and strengthen the 1,900.00 mark.
In the meantime, a new channel pattern has been added to the chart. Namely, there is a channel up pattern that captures the metal's December recovery.
Daily Candle Chart
Long sentiment declines
On Friday, on the Swiss Foreign Exchange the sentiment was bullish, as of total open position volume 63% was long.
On Monday, the sentiment was 57% long. Most likely traders closed long positions as they took profits at the 1,900.00 mark. Meanwhile, some traders did it through a stop loss, as the bullion experienced a sharp decline.
Meanwhile, in the 1000-pip range around the metal's price the pending orders were 65% to buy the metal.