Quick Fibonacci Retracement Update for Gold and US Dollar Index

May 27, 2013: 11:50 AM CST

Toward the end of last week, Gold and the US Dollar Index developed a short-term trading range or “support shelf” between the 38.2% visual Fibonacci Retracement reference level.

Let’s take a quick moment to update the structure and view these trading and short-term game-planning levels.

First, Gold (@GC Futures) 20-min chart:

For a broader perspective, see my prior update post “This Would Really be a Great Spot for a Gold Reversal” which refers to the key inflection support near $1,350.

After a strong up-day reversal on May 20th, gold has traded violently between the key confluence into $1,400 which is a “round number” reference along with the 38.2% Fibonacci retracement line.

This should be the short-term focal point for swing and intraday traders.

Gold developed a range between the $1,360 and $1,397 level throughout the week which forms the foundation for trade planning.

A continuation of the range leads to a swing or retest back to the $1,360 level (look for triggers under $1,390 and $1,380 especially) while a breakthrough above $1,400 strongly suggests that gold will impulse once again to the 50% level and prior high into $1,413 or even back to the mini-range and 61.8% Fibonacci Level into $1,430.

Perhaps not surprisingly, the US Dollar Index (seen as the @DX futures contract) has a similar pattern (and plan) in the opposite direction:

While gold fell sharply at the beginning of May, the US Dollar index rallied quickly from 81.80 to 84.50 in the futures contract (similar levels in the index itself).

As such, the 38.2% downward Fibonacci retracement aligns into the 83.50 level which is just under the triple-support swing/reversal through the latter half of May.

Similar to gold, a continuation of this short-term support shelf/rectangle pattern should lead to a retest of the highs while a breakdown thesis triggers under 83.50 and 83.40.

A breakdown immediately targets 83.15 then the ‘closing’ of the May 10th gap and 61.8% Fibonacci Level into 82.80.

While this post is a quick update of intraday charts only with respect to Fibonacci Levels and a short-term range pattern, continue studying higher timeframe charts and incorporating these patterns – and the higher frame targeting – into your trading decisions.

Corey Rosenbloom, CMT
Afraid to Trade.com

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One Response to “Quick Fibonacci Retracement Update for Gold and US Dollar Index”

  1. Trade Planning as Gold Attacks Key Breakout Level | Afraid to Trade.com Blog Says:

    […] there, a series of higher momentum highs along with bullish spikes in price contributed to the sideways trading range and key focal level at the $1,400 confluence (prior update […]