Taking a break from the speculation over Greek Elections, Spain & the future of the EU, today we will focus on a commodity that will always have value...Gold. XAU/USD is Gold paired against the US Greenback (Dollar) and it is giving us mixed signals from a technical point of view. The Daily Chart is forming a Bearish Ax, although a rather sloppy one it suggests that the pair will trade lower after breaking out to the downside. However, the Weekly Chart is showing is a much stronger, more text book like Bullish Ax Formation suggesting that price will break higher. So which one will it be? Quite possibly both...in the lower time frame this pair might indeed break lower and possibly re-test the well established floor at around 1525, with Support seen at 1610, 1586 & 1538 levels...but then bounce and use the momentum to break much higher. If the floor is breached, additional support waits to push back at 1501 & 1441.80. We will be looking for a close above 1645, or the Monthly R1 in order to succeed in breaking the series of lower highs set by both the daily & weekly charts. In order to do this, prices will have to battle Resistance levels at 1625, 1632 & 1639. Once the pair clears 1645, more Resistance will be waiting at 1730 & 1790 on its way back up to challenge the long term high at 1920. I am cautiously Bullish on this pair overall, and am looking for price to pull back to approx 1580 to once again buy and hold indefinitely.
Happy Trading!