Gold Price: Continued Support Holds the Down-Trend
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- Gold Technical Strategy: Flat
- Gold is continuing to ride the support trend-line discussed in yesterday’s piece.
- Gold is getting continued support above the $1,100 psychological level after quickly breaching on Friday.
Trend-line support has continued to hold Gold from further drops after a quick pop below the $1,100 psychological support level on Friday. With now five consecutive days of support wicks intersecting with $1,105, a potential higher-low from the previous support zone of $1,070-$1,080 could be getting carved out in the yellow metal, which could be encouraging for long positions should this support continue to hold.
Moving forward, a daily close below $1,100 psychological whole-number support could make short positions attractive, with targets set towards $1,087.05, which is the 50% retracement of the ‘big picture’ move in Gold, taking the low from 1999 to the highs of 2011. After $1,087.05, previous price action support at $1,071.28 becomes a level-of-interest, as this is a five-and-a-half year low.
For potential long positions, traders have two options: They can wait for higher-low support to be confirmed by rising prices, at which point a less-attractive risk-reward ratio may be available with stops below $1,098.66 support (the low from Friday); or they can let the up-trend confirm by waiting for another lower-high to print, thereby opening the door for targets at $1,140, and then $1,155.47 (61.8% Fibonacci retracement of the ‘secondary move’ taking the lows of 2008 to the highs of 2011).
--- Written by James Stanley, Analyst for DailyFX.com
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