Fibonacci Confluence Prices on Gold Weekly

Feb 24, 2009: 10:46 AM CST

What might be potential Fibonacci Confluence Cluster zones for gold?  Let’s also take a quick look at the Weekly Chart Structure to see where we’ve come from and where we might be headed.

Gold Weekly (Fibonacci):


(You’ll need to click for large image)

The Fibonacci grid is drawn off the $1,000 level which does not necessarily imply resistance at the current level.  The grid is drawn to key lows to find possible support zones should there be a pullback.

The first such confluence zone comes in at the $840 level which held support for a prior small pullback to the 20 and 50 EMAs (great place to get long at the time, by the way to target the $1,000 area).

Though not technically a confluence zone, the second such support zone is situated at the $680 level (which also represents prior resistance… if gold ever makes it back to test that level).

Otherwise – looking at the chart beyond Fibonacci – it appears we could be in a 5th Wave up, with W1 being the 2006 peak, W2 being the pullback (ABC or mini-triangle) in mid-2006, W3 being the  $1,025 peak in early 2008, and W4 being the deeper pullback into the end of 2008.  If this is correct, then there could be further upside potential (though technically, Wave 5 could end in a truncation).

Beyond Elliott and Fibonacci, we have a clear picture of strength in gold going back actually to 2001 – the long-term trend is clearly up and the path of least resistance still appears to be to the upside.

Price is above all three key weekly moving averages, and all of them are in the ‘most bullish orientation possible.’

Price etched out a new momentum high recently in 2009 off the strength of the present rally, which further hints that higher prices may be yet to come.

The $1,000 per ounce level is obviously important, and price could find resistance there… or could break through.  It looks like odds favor a pullback/retracement off these levels in the short-term now.

One thing is for certain – either way, gold won’t stay at $1,000 per ounce for long.  It will either inflect down, consolidate, and perhaps make a new test back up, or it breaks through here and with gold through the $1,000 level, expect to see higher prices yet to come – particularly in such an unstable economic climate.

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Corey Rosenbloom
Afraid to Trade.com

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