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Take a look at gold prices hanging out near a key trend support zone:

Gold (XAU/USD): 4-hour

Gold (XAU/USD) 4-hour

Gold (XAU/USD) 4-hour Chart by TV

If you’ve been watching gold prices for a while, then you’ll know that spot gold has been killing the U.S. dollar since mid-March when XAU/USD took off from the $1,810 levels.

In fact, XAU/USD has been trading inside an observable ascending channel since late March.

Can gold bugs keep the party going in the next few days?

XAU/USD is approaching the $2,000 psychological level that lines up with the 4-hour chart’s 100 and 200 SMAs and the 61.8% Fibonacci retracement of May’s upswing. It’s also not too far from the bottom of the channel that we’ve spotted.

And then there’s the bullish divergence on the 4-hour time frame as Stochastic hits a deeper “oversold” level while the price makes higher lows.

A long trade at the $2,000 mark would yield a decent risk ratio especially if you place your stops just below the channel and aim for XAU/USD’s May highs near $2,070.

Before you buy like there’s no tomorrow, though, you should note that the 100 and 200 SMAs look like they’re flattening, which suggests a slowdown of the uptrend’s momentum.

If XAU/USD traders decide to keep the pair in a range instead, then we could see a move down to the $1,970 handle before gold sees more buyers.

What do you think? Which way will XAU/USD go?