XAUUSD is breaking above the strong upside resistance of 1940 and is heading higher. A target higher in the medium and long term could be 2070. We had an easy break above 1920 and 1940 which can indicate a significant strength for a push higher to at least 2040.
On the weekly XAUUSD chart, we see a meaningful bounce of the strong support of 1820 which is an uptrend channel support, and a runaway gap higher with a strong weekly close above the key medium-term 1940 resistance. As we saw from the monthly chart continuation higher to a previous top could be on hold when XAUUSD reaches 2040 which is the uptrend channel resistance where we could see a minor pullback before a final push to 2070.
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As the famous trader says…
“Returns matter a lot. It’s our capital.”Â
Abigail Johnson
How to trade this?
It is obvious that for Q1 2023, we have this upside resistance of 1940 which is being broken for an upside continuation. This does not mean that now short trade entries have some advantage over long trade entries as the overall short-term trend is still an uptrend. You should open a long trade, in the case of a pullback to 1970 to target 2040. The risk to reward on this trade is higher than 1 and the timing of the trade depends on a price action pullback to 1970 if happens. In the case of a break below 1920 open a short trade with the stop loss just above 1930. This could prove a perfect long or short trade depending on a price action breakout.
