GOLD PRICE TALKING POINTS:
It has been a barbarous showing so far in 2021 to get Gold prices, losing as much as 14.41% by the 2021 high to low.
Gold costs are leaping now after setting another new nine-month-low yesterday, however, started to bounce before testing the April/June lows around 1670.
The analysis within article relies on cost action and chart formations. To learn more about cost action or chart patterns, take a look at our DailyFX Education section.
While many risk resources have appreciated a strong start to the year, with even some micro or small cap stocks being bid’to the moon,’ it’s been a very rough year for Gold bulls. That is in stark contrast to last year, when the Fed’s quick currency printing initiatives helped to support the bidding Gold as buyers drove prices up to a fresh all-time-high in August of last year.
However, tonality can change very fast in markets, especially when stimulation is demanded; and after Gold prices placed at a bearish engulfing candlestick on the Daily chart, frequently approached with the purpose of bearish continuation, things have just been the same. Gold prices have to re-engage with this former high at 2075. And what originally looked like a pullback has turned into a lot more as there have been valid bearish reversal tendencies during this recent movement. Key of which had been reaction to positive information items — such as the large bearish bar that Gold had published on November 9ththe day that we heard of vaccines nearing ready.
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Last week saw another significant test when Gold prices moved-in for an evaluation of the 38.2% Fibonacci retracement of the 2018-2020 big move. Well — the Fed did hike then comment but they quickly altered stances coming into 2019, going into a cutting cycle, and this helped to support the bid in Gold. Hence the 38.2% retracement of this move is essential for fashion continuation purposes if that bullish cycle is to last.
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GOLD WEEKLY PRICE CHART
Given some increased granularity with short term Gold costs, and there is some additional context to work with. On the below Daily chart, Fibonacci retracements have been added to 2 different shorter-term major moves.
On the below graph, the major move spanning from March-August has been summarized in Red and also the shorter-term move from the June lows up to that August high are plotted in Green. Collectively, this can provide some regions of confluence that highlight strategy elements that could be usable in the days/weeks beforehand, and will probably be looked at in greater depth somewhat lower in this article.
To Find out More about Fibonacci, or plotting Fibonacci retracements across timeframes to identify confluence, check out the recently established Fibonacci sub-module inside of DailyFX Education
On the hourly graph below, some strategy parameters start to reveal themselves. Prices have only pushed right into a resistance zone that’s already held multiple inflections within the last couple of weeks, first as support and then through numerous iterations last week — as resistance. The key area here is that 1725.69 level, which is that the 38.2% retracement of the 2018-2020 major move. A break-above that may open the door to bullish trend strategies but — until then — that seems like a corrective movement.
If buyers may push past 1725.69, start looking for a huge test in the 1759-1766 area, since there’s a number of things there including a couple of Fibonacci retracements to cooperate with some crucial price action swings.
On the support side of this issue — there’s a thing of interest round the 1700 psychological degree , which syncs using a prior price activity swing, after which the Fibonacci degree at 1689.68 comes into perspective. Below that — we are taking a look at a zone from the June low up to last week’s low as an’s3′ support zone.
