To my dear readers and followers here, not a lot of change on this front in gold prices. Tuesday’s highly expected drop dug as deep as 1256.8, which is only 12 pips above Monday’s low, and is in the same area of the Fibonacci 38.2% support this level and I thought about this for the past few days. Recent reports focused on the fact that the price has topped very close to the micro term Fibonacci 61.8% retracement level, when it reached 1284.7 on Friday, then 1285.8 on Tuesday, which is only 5 pips below this retracement level! So, it is obvious that we are facing resistance around the Fibo 61.8% level at 1286.3, and we also have support around the 38.2% Fibo level at 1256.5. From the price action seen in the past 3 days, a break of either levels will be expected to result in a strong move in the direction of the break.
Moving in both ways, with such sharpness, does not help a lot in determining what the direction of the larger degree trend is. However, there are signs that the recovery from last Thursday’s low, as strong as it is, may have ended, and could be only a correction for the previous strong drop. Tuesday’s high 1285.8 was only 5 pips below the micro term Fibonacci 61.8% retracement which is at 1286.3. That was a fantastically accurate stop, from which the price dropped very hard. However, it found support again in the same area it did on Monday, but the fact that we only reached the medium term Fibonacci 38.2% retracement level so far (1256.5), gives room for a continuation of the, targeting, for example, the medium term 50% retracement at 1237.8, the 61.8% level at 1221.3, or even the 71.4% retracement at 1207.9. Reaching at least one of those levels is possible & even probable, even if the price is to continue moving higher for the medium term.
Resistance levels start at the falling trend line from today’s current high, which is currently running at 1264.0. A break above this level is a sign of strength, but another hurdle awaits the bulls at 1269.7. Breaking this level would confirm the strength, and will open the way higher towards other retracements at 1272.9, 1274.3 &1277.2. A break above the last one is specific would be a strength sign indicating ability to retest the very important 1286.3. Another resistance that deserves our attention, and can help a lot in determining if Friday’s strength is only corrective (or otherwise) is the micro term 71.4% retracement at 1291.7. This resistance may very much work as a confirmation level for breaking 1286.3 in the sense that a break above 1291.7 confirms breaking 1286.3, while failure to break 1291.7 is a sign that breaking 1286.3 would not be sustained. A break above 1291.7 indicate short term strength, and will be expected to open the way higher towards 1299.6 first, ahead of 1307.6, before targeting the medium term 85.7% retracement at 1314.5, ahead of 1322.7.
On the support side, first we have the current daily low 1258.8. A break below this level would be a first sign of weakness. If this break actually happens, it should open the way lower towards Tuesday’s low 1255.6, ahead of last Thursday’s 15-day low 1251.8. In this case, the bears will be expected to pull the price lower towards at least one of the medium term retracements at 1247.8, 1237.8, 1227.8 & 1221.3, which all make very good potential targets, ahead of the life or death level at 1207.9.
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