Big Picture Planning the Key Support Shelf and Range in Gold

Jun 25, 2015: 1:08 PM CST

On the short-term frame, Gold trades within a well-defined rectangle trading range.

Traders can continue playing “Ping-Pong” range-fade trades as long as price bounces between clear support and resistance levels.

However, let’s pull the perspective up to the weekly frame to note just how important our current levels have become and what may be the plan for the future should price break free of this range.

We’ll start with the Daily Chart to highlight the range:

Through all of 2015 (and the latter part of 2014), gold prices have bounced between the highlighted range above (with one exception – the breakout and return in January).

Think of $1,200 as the “Magnet Level” which means that when price departs from this level, it returns toward this anchor price and alternates above and beneath it.

You can also think of $1,200 as the anchor price for a rubber band where price “snaps back” when it moves too far away from this focal point.

In chart terms, a key support level has developed near the $1,170 level (green) and resistance developed into $1,220 (red).

A “Double Bottom” occurred just under $1,160 for V-Spike Reversals that propelled price higher back into the range.

For short-term traders, plan your strategies with respect to these levels – playing bullish bounces “up away from” the $1,170 pivot and then “down away from” the resistance level near $1,225.

These strategies will continue to be effective until gold breaks free once again of this range – and be ready for that.

Here’s the Weekly Chart which highlights the trend and prior importance of the exact same level:

Our planning strategies (short-term) come from the Daily Chart but the weekly chart gives a clearer perspective.

Note the early strong rally from $800 to the $1,900 level and the bear market (downtrend) reversal that took us back toward the $1,200 level where price balances now.

This same level was very important in 2010 until price broke free of this range, emerging into a powerful bull market uptrend.

Though price is officially in a higher timeframe Downtrend, we do see the buyers/funds supporting price into the $1,170/$1,200 levels.

For now, this will continue to be our focal point as the downtrend potentially continues with a breakdown… or perhaps breaks and reverses higher which would appear to be the bullish outcome more traders are expecting.

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Corey Rosenbloom, CMT
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1 Comment

One Response to “Big Picture Planning the Key Support Shelf and Range in Gold”

  1. Rahim Says:

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