XAU/USD: A decline is likely to continue

February 17, 2016

On the 4-hour chart, the price is testing the level of 1210.80 (23.6% correction); the ascending 38.2% fan line is an additional resistance for the price. If this resistance area is overcome, a growth would continue to 1224.90 and 1249.25. However, a likelier scenario is a price rebound and a decline to 1187.00 (38.2% correction), near a crossover with the 50.0% fan line, and 1168.00 (overlap of the 50.0% correction for the short-term trend and the 38.2% correction for the medium-term trend).

On the daily chart, the pair is trading near the level of 1200.50 (23.6% correction). A breakdown of this level would lead to a decline to 1171.80 (38.2% correction), near a crossover with the 50.0% fan line, and, possibly, to 1148.60 (overlap of the 50.0% correction for the medium-term trend and the 61.8% correction for the short-term trend) A price rebound from the level of 1200.50 could lead to a growth to 1229.00 and 1246.50.

Trading tips

Sell the pair from the level of 1187.00 with targets at 1168.00, 1148.60 and stop-loss at 1190.50.

Alternative scenario

Buy the pair if the price breaks out the level of 1210.80 with targets at 1224.90, 1249.25 and stop-loss at 1202.00.

Publication source
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