Gold Near Bottom of Range or About to Break Down?
- Important timing relationship coming up in Gold
- Support between 1203 and 1179 looks critical
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Is Gold a potential buy as it trades towards the bottom of the range that has dominated trading over the past year? Cycle analysis suggests it could be as an alignment of timing relationships over the next few days should increase the possibility of some sort of reversal during this period. We think the potential for a turn in Gold is bolstered by recent sentiment data which shows one of the least bullish readings in the metal in recent years as the Daily Sentiment Index or DSI fell to just 5% bulls on Thursday. From a contrarian perspective such extremes in sentiment are worrisome as they so often materialize at the end of moves. Key support over the next few days looks to be between 1203 and 1179 as this zone marks the 78.6% retracement of the December to March advance and the low of 2013. A successful hold of this zone would be seen as positive and set the stage for potential run higher back into the middle of the range. New trend lows after Tuesday would undermine this potential positive view.
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XAU/USD Daily Chart: September 19, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 1236 (Gann), 1260 (Gann)
Support: 1203 (Fibonacci), 1179 (Gann)
Strategy: Buy Gold mid-week
Entry: Buy Gold on Tuesday’s close if above 1203
Stop: 1-day close below 1179
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.