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Gold rises from a key pattern formation…

In the article Gold price trading at a key level published on 17 October 2015, we covered a key level and indicated a bearish tone if the Gold price closed below a key level. Infact, it did. We saw a continuous selling from there on for several weeks. But, now, the price of Gold has hit a key level and formed a major pattern formation. The price of Gold could rally several hundred dollars per ounce from they key pattern formation.

Lets take a look at the chart below. 1048 is a key support level. Going back to a structural support level from March 2008. Further it formed a 3 drives to a bottom pattern at this key level where the last support level came from the 127.2% Fibonacci expansion level. The Gold price hit this level past week. What is interesting to observe is that two key events took place last week. Last Thursday, the ECB (European Central Bank) president Mario Draghi unveild further easing measures. However, this did not meet the market expectations as market expected further easing or more dramatic expansion on the QE. This lead to the Euro being higher against the US dollar and as the US dollar came under pressure, Gold benefited. More interestingly, last Friday the non-farm payroll data came out. The numbers were stronger than expected, this fueled the rate hike expectation for the Fed meeting to take place next week. After this event, we saw solid buying coming into the Gold market and also the US equity market were higher.

So what does it mean for the next move in Gold? Here are the next levels being watched. As long as this key support level of $1048/oz is held the buy signal in Gold continues, we have the following upside targets/resistance level. There is little bit of structural resistance at the $1100/$1103 per oz level. The price maypull back from here a little bit. The first target comes at the $1160/oz level. This is the 100% price projection of the rally which took place this year from July to October in the Gold market. This also coincides with the 78.6% Fibonacci retracement level of the move down from 12 October to the recent low. If we close above this level, the further upside targets come at $1210/oz to $1220/oz and finally from $1255/oz to $1280/oz levels.

Which of these levels is it going to hit, we will pay attention to the angle of the rally as an indication how the move is unfolding in Gold.

Gold GC Front month contract weekly chart:

Gold Weekly chart. 6 December 2015. www,marketchartpattern.com

Gold Weekly chart. 6 December 2015. www,marketchartpattern.com

 

Gold daily chart GC Front month contract:

Gold Daily chart. www.marketchartpattern.com

Gold Daily chart. www.marketchartpattern.com

 

We wish you good luck and prosperous trading!

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