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Correction Looming in Gold?

By , Sr. Currency Strategist
28 August 2013 16:50 GMT

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The rally in Gold over the past two-months has been impressive and especially so over the past few weeks following the break of key Fibonacci related resistance at 1348. However, as we have mentioned in recent Price & Time notes, the cyclical outlook will be turning less positive in the next few days. At the same time the metal is facing these cyclical headwinds it is nearing critical resistance at 1440. We consider this area critical as it is the 100% projection (measured move) of the July advance as measured from the August 7th low and is thus a natural potential stopping point for the metal in both a short and longer-term context. With sentiment studies also near levels of excessive optimism we like the risk/reward profile of positioning counter-trend for a few days.

XAU/USD Daily Chart: August 28, 2013

range_xau_body_Picture_2.png, Correction Looming in Gold?

Charts Created using Marketscope – Prepared by Kristian Kerr

Key Event Risks in Coming Sessions:

range_xau_body_Picture_1.png, Correction Looming in Gold?

LEVELS TO WATCH

Resistance: 1423.70 (June High), 1441 (Fibonacci)

Support: 1385 (Gann), 1348(Fibonacci)

STRATEGY – Sell XAU/USD later this week

Entry: Sell XAU/USD at 1440

Stop: 1-day close above 1458

Target 1: 1400

Target 2: 1385

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter at@KKerrFX.

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28 August 2013 16:50 GMT