Here we are once again at another decision point for GOLD. Today was not a good day for GOLD. The daily chart painted a bearish engulfing day with decent volume.The "news" was bad: "Gold falls as speculative bets unwind". If you are investing in GOLD, what should you do? Follow the news? ... Let's see what the charts are saying.
We'll first take a look at the short term picture. We'll then "zoom" out to see the big picture.
This is an hourly chart showing the past 4 months, which includes the entire decline since December. Looking at the Fibonacci retracement levels between the Dec high and Feb low, GOLD retraced into the 50-61.8% region, and was then rejected where it met with resistance from the Jan high. However, note that there is a continuation head and shoulders bottom forming. A breakout above of the neck line would favor the resumption of the uptrend. With today's decline GOLD has reached the 31.8% Fibonacci retracement level for the rise since the Feb low.If GOLD can't hold this level, the next support level is at around 107, which aligns with the 50% Fib retracement level. Play close attention also to the Fib Fan Lines for timing purposes.
In my next post, we'll step back and expand our perspective ...
Becoming an Evidence-Based Trader
2 days ago