? XAU/USD Challenges Resistance Zone in Downtrend Channel ?

May 8, 2019

3 min read

Hi traders,

the XAU/USD bounced for the second time at the support trend line (blue) and is expanding the corrective price action. Price is now approaching a critical resistance trend line (red) for a major bounce or break decision.

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XAU/USD

Daily

The XAU/USD bull breakout above the resistance (red) line of the downtrend channel could indicate the end of the bearish price swing and aim for the next resistance trend line (red) whereas a bearish bounce could favor a downtrend continuation once price breaks below the key support line (blue). A bearish break aims for the Fibonacci levels of wave E vs D.

4 hour

The XAU/USD seems to be completing a larger ABC (orange) correction within a wave 4 retracement (green) but the current wave outlook is only valid if price fails to rbeak above the resistance zone. A break below the support lines (blue) could confirm this wave pattern and indicate a downtrend continuation. On the other hand, a bullish break above the resistance (red) invalidates this wave pattern and indicates potential bullish momentum.