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3 Technical Analysis Tools to Identify Key Resistance Levels on Gold XAUUSD

Updated: Sep 16


how to find resistance on gold

How to trade Gold when it is constantly setting new all-time highs?


When Gold is trading beyond historical levels, technical analysis can help you to identify the next potentially strong resistance levels.


In this article, I will teach you the only 3 technical analysis tools you need to find the next key resistances and predict future correctional movements on Gold chart.



Tool 1 - Trend Line


The first technical analysis tool that will help you to identify a potentially strong resistance is a trend line based on previous highs.


Simply analyze the previous historic highs and try to find a trend line that was respected by the market at least 3 times in the past.

It means that such a trend line should be based at least on 3 historic highs.

gold trading beyond historical levels

Look at that rising trend line on Gold on a daily time frame. It is based on 3 historic highs, and it can be a potentially strong resistance.

vertical resistance gold

Tool 2 - Psychological Levels


The second technical analysis tool is psychological levels.

These levels are based on round, whole numbers.


psychological level on gold

In our example, the closest psychological level is 2500 level. This level is based on round numbers, it is a multiple of 500 and 100.


It can compose a potentially strong resistance cluster.


gold signals with technical analysis

Tool 3 - Fibonacci Levels

The third technical analysis tool is Fibonacci extension and confluence.


In order to identify a potentially strong resistance with Fibonacci extension, you should identify at least 3 last bullish impulses/waves.


price action analysis gold

Above is the example of 3 significant impulse legs on Gold chart on a daily.


Draw Fibonacci Extension levels based on these 3 impulse legs.


Here are important Extension levels to consider:            -1.272

               -1.414

              - 1.618


fibonacci analysis on gold

Above, you can see how I draw Fibonacci Extension levels based on all the impulse legs that we identified.


Your task is to identify the point where the extension levels of 3 impulses match in one point. Such a point will be called confluence zone.


fibonacci confluence gold

This confluence zone will be the next potentially strong resistance.


gold trading beyond historical levels

These 3 technical tools helped us to identify the resistances beyond all historical levels easily.


Remember that there is no 100% guarantee that all the resistances that we spotted will be respected by the market.


For that reason, you should strictly analyze a price action and a reaction of the price to these levels before you open a short trade.


Alternatively, remember that these resistances can be applied as the targets for long trades.

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