The story of November has been the weakening of the US dollar, which has helped dollar-denominated assets like gold, which has increased by more than 3% since the end of October.
However, given the possible double top chart pattern we can see building on the hourly chart above, the $2,050 level may represent the current peak for gold prices. Will this attract sellers and/or profit-seekers at the end of the month?
Again, we can see a double top formation in the works and if does play out, then that may draw in technical sellers on XAU/USD.
This could bring the market lower this week, along with bullish USD drivers, and if so, the next support area to watch is the potential area of interest highlighted on the chart above. Countertrend plays tend to be low probability setups, but it’s something to consider for you gold bears out there.
Technically speaking, the rising "lows" trendline, increasing moving averages, and broken resistance levels between $2,000 and $2,020 are converging on the above 1-hour chart. When combined, this area can attract technical-based orders, where buyers could outnumber sellers hoping to take advantage of the rally.
Therefore, before developing a long-term risk management strategy, this could be the region to monitor for bullish reversal patterns to emerge if you have a fundamental bullish view on gold.
Naturally, depending on what the fundamentals are telling traders, more long profit taking and/or new shorts may jump on a possible new trend lower if the market violates this region to the downside and holds.
