A Quick Monthly Chart Fibonacci Confluence Support Level Update for Gold

Jun 21, 2013: 7:47 AM CST

After the collapse Thursday in the price of gold toward and then under the $1,300 support target level, let’s update our Fibonacci grid and note why this level is so important both as a target and yet another “make or break” key level on the chart.

Here’s the Monthly Fibonacci Retracement Grid:

Fibonacci Retracements for Gold GLD

I just wanted to do a quick update post to highlight the dual Fibonacci Confluence into the current $1,300 target level.

Specifically, we have the overlap of the 38.2% ‘larger’ retracement $1,285 in the context of the entire “Bull Market” from 2000 to 2011’s peak.  Price closed just under this level Thursday but traded back above it Friday morning.

The other confluence is the 50% Retracement of the late 2008 low (near the end of the Financial Crisis) also to the 2011 high – this level is right at $1,300 ($1,301).

For trade and target planning, it would be logical to expect a bounce/rally up off this level (‘bullish bias if back above $1,300) but also the price triggers another breakdown/sell signal on a break of Thursday’s low under $1,280.

While gold has shown a propensity to bounce even in the context of a stellar downtrend, any breakdown there opens the price pathway toward the next lower Fibonacci and price confluence first to $1,200 (Round Number), then the $1,154 level (61.8% retracement as shown) and finally near the dual overlap into $1,100 (Round Number and 50% ‘large scale’ Fibonacci Retracement).

It’s understandably easy to get caught up in day-to-day events but it can be very helpful – at least for giving perspective – to step back to a higher timeframe chart to note key levels beyond what’s seen on the Daily or intraday charts.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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