Gold is coiling for something... but we need to be patient
- Gold topped out at 1377.5 in July, just shy of a big Fibonacci level
- It's been sideways/messy since
- We are holding support at 1310 though
- A move is due, but there's no point trying to pre-empt it!
By Clive Lambert
Gold got up to $1377.5/oz in July, which was bang on a big area of resistance. $1380.7 is the 38.2% retrace of the entire move lower since we topped out at $1923.7 back in September 2011. This sell off saw us down to $1045.4 towards the end of 2015.
On the way down we saw a significant high/failure at $1392.6 in March 2014 as you can see from our weekly chart.
So $1380-$1400 was always going to be a tough area to see off, and so it's proved.
What we've seen since that July high is a pretty tight range with support showing up at $1310 in late July, an area that's held on a number of tests since.
All the time we're above $1310 I'm prepared to give the bulls the benefit of the doubt and expect this to resolve to the upside, which might "trigger" on a move above the short term downtrend line on our daily chart, which currently sits at $1346.
But for now we're not making this move and Friday was another example of selling on strength.
This hold of support whilst making lower highs in the short term has formed something called a descending triangle in chart terms. These are generally "completed" or resolved in the direction of the overall trend, which is higher. So we should, according to conventional chart wisdom, break $1346 then head back to, then through $1380-$1400.
But for now it's a waiting game...
Chart 1: Weekly Bar Chart
Chart 2: Daily Candlestick chart showing the descending triangle continuation/holding pattern.
— Edited by Clemens Bomsdorf
Clive Lambert is chief technical analyst at FuturesTechs