No COT reports, no China or India demand, no consideration of so called “manipulation, ” just good old fashioned technical analysis using a very simple Fibonacci method. Let’s work our way through some charts and see if we can highlight some key Gold Fibonacci levels.
Let’s start with a 5 year weekly chart of Gold Futures, noting some key Gold Fibonacci levels (price support and resistance).
As you can see, gold has been consolidating since mid 2013 and the “wedge” is getting tighter. Currently, I have a downside fib target of 1033.4 with overhead resistance at 1488.8 and 1561.8. Gold would have to break through and close above these 2 levels with volume to have any chance of reclaiming its September 2011 high (1923.7).
Another crucial level is support at 1179.4. That low was made in June 2013 and has held so far. A close below 1179.4 would technically weaken gold a great deal.
Let’s look at the wedge without the Fibonacci drawing in the above chart. The range has narrowed from $252 to $152 and now is in a $59 range.
Now let’s begin to break the chart down to get a more clear picture of important support and resistance levels.
This is the same 5 year, weekly chart. I’ve drawn what I call a “fib within a fib.” This is nothing more than drawing shorter term Gold Fibonacci levels inside the larger, multi-year levels.
As you can see, the target of 1341.9 was hit and rejected the week of July 7, 2014. The 2 support levels are 1281.4 and 1271.6. A close above 1341.9 or a close below 1271.6 would constitute a new draw.
I could continue to break the chart down into small time frames, fibs within fibs, until you get all the way down to daily levels. For now, I think these longer time frames are more important to monitor rather than drilling down to shorter time frames. This eliminates a tremendous amount of the “noise” inherently associated with the shiny metal.
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.