For dear readers and followers in gold trading, from here in my views it seems like gold was in need of something like the nonfarm payrolls in order to break the area between 2 Fibonacci levels it spent most last week within. However, the strong break itself has also stopped with stunning accuracy at another retracement level: medium term 57.1% at 1227.8. In spite of the very sharp drop seen on Friday after the payrolls number, the day’s low was only 5 pips above this level!
This kind of behavior, of finding support at key Fibonacci or retracement levels, indicate that the current trend in up, and since this is a medium term level, we can say that it is only logical to assume the medium term trend to be up, as long as this & other medium term retracements hold. However, we need to see an indication of strength, a break above an important resistance, in order to have more confidence in this analysis.
Yesterday’s drop resulted in a break below the rising trend line from Friday’s low, but this deep correction found support very close to the 85.7% retracement at 1230.8 (yesterday’s low was 1231.1). This is an important support to watch, and we also have a closer level at 1234.0. Holding above both of those levels would be a good thing for the bulls. On the other hand, a break below 1234.0 would be a first weakness sign, a stronger one will occur if we break below 1230.8. In this case, reaching levels below Friday’s low will become highly probable. In this case 1221.3 makes a very good target, ahead of 1217.6 & 1207.9.
On the resistance side, first we have the falling trend line from yesterday’s high, which is currently running at 1238.1. A break above this level would be a sign of strength, targeting another test of yesterday’s daily high 1245.9 ahead of more important resistance levels at 1248.6, 1253.3 & 1257.2. As it is always the case with retracements, a top very close to any of those levels would be a weakness sign, while breaking above each of them would be a sign of strength. A break above the last level would indicate the ability to break above Friday’s high 1268.8. In this case 1273.6 & 1277.3 make very important targets & potential turning points.
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