Axi | Feb 14, 2017 11:50
Originally published by AxiTrader
Gold has been mapping out some perfect technical patterns over recent months.
Overnight we saw a continuation of this trend with the price of gold in US dollars pulling back to test the break out level from last week.
That sets up a nice chance for a look at the charts and what they suggest for gold going forward.
Gold bottomed in late 2016 around $1122. That was just a couple of dollars below the 76.4% retracement level of the 2015/2016 rally. That is, 76.4% in the fibonacci sequence is the ratio of the numerator which proceeds the denominator by three spots in the series. For example 21/89 or 34/144.
Since finding support at this last line of defence gold has rallied in a series of neat technical moves.
It's an amazing example of almost perfect execution of technical parameters and expectations. Although it has yet to satisfy my own expectation of a test into the $1248/57 region - a confluence of the 138.2% projection and a 50% retracement of a larger move.
That is a very interesting question. But it is one which also suggests the $1219/20 region is once again the key area of support. It's also the breakout level - so it's important.
When I look at my daily charts the system I use is short gold and has been since the break of the trendline late last week I mentioned in my daily note.
Naturally the key is whether gold can hold the $1219/20 level short term.
Below that gold's support zone is getting very congested in the near term and the $1212/16 region now looms large as to key to whether or not gold could retrace all the way back to $1180/90 or is headed up to $1250 and beyond.
Have a great day's trading.
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