Gold Price Analysis: Quick retracement below $1861 cautions the XAU bulls – Confluence Detector

After a sprint to fresh nine-year highs of $1866.90, gold has eased below the critical resistance at $1861. The bulls appear exhausted after the recent run-up while the US dollar catches a minor bid amid mixed market mood. Let’s see how it looks from the technical perspective.

The Technical Confluences Indicator shows that the yellow metal is likely to find the immediate support at $1852 (pivot point one-day R1) on its corrective move lower.   

A break below the latter will trigger a fresh drop to $1845, where the pivot point one-week R3 lies.

Further south, the price will face a bunch of hurdles around $1840/42 region before reaching the downside target at $1837, the Fibonacci 23.6% one-day.  

On the flip side, the previous target at $1861 now appears to be the critical barrier for the bulls to takeout. That level is the confluence of the pivot point one-month R2 and pivot point one-day R2.

The next barrier is aligned at $1866.90, the nine-year high.

However, the bullish bias has somewhat weakened after the price failed to resist above the $1861 mark.   

Here is how it looks on the tool

Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.

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