We’re watching a key inflection level in Gold and I wanted to update the current chart landscape to show these levels along with the developing short-term structure.
Let’s start with the Daily Chart and highlight the easy-reference levels:
In simplest terms, the upside resistance barrier exists from $1,680 to $1,700 while the downside support level trades from $1,630 to $1,640.
Starting with the upside chart-based resistance, we note the falling 50d EMA at $1,685 and the upper Daily Bollinger Band at $1,697.
Beyond that, we can easily see a price-based resistance high (the most recent swing high) at the $1,700 “Round Number” level.
You can also visualize a falling longer-term trendline starting at the October 2012 high which ends at the present $1,700 level.
From the downside support perspective, we see a longer rising trendline into the $1,660 region which is just above the most recent “spike” reversal lows off the key $1,635 level. The lower Daily Bollinger Band is $1,645.
In other words, the short-term bounce-around boundaries rest from $1,630 to $1,700 and that’s where price has been trading recently.
Let’s look at the intraday perspective on both the 30-min and 15-min charts for more details:
Gold (Continuous Futures @GC) 15-min (finer detail):
On the 30-min chart, we see the operating short-term Fibonacci Retracement levels, the most important of which are $1,666 (current short-term high) and $1,658 (short-term low).
As price interacts with these levels, we note the short-term positive momentum divergence into the key $1,650 support line which suggests a possible bullish or upside resolution toward $1,675.
That short-term bullish expectation would trigger on a breakthrough above $the recent high into $1,667.
Continuing the logic, a breakthrough above $1,675 (the short-term target) would suggest that gold could travel higher toward the $1,700 daily chart confluence.
When planning trades, we have to be prepared for both outcomes (a breakout or a breakdown) and thus bearish trades would trigger under the recent support lows into $1,655.
A clean breakdown under $1,655 could target the prior swing low and support cluster near $1,635.
Even if you don’t trade gold, you can use the same type of logic (starting with the higher timeframe and creating a game-plan from the details of the lower frame) on the stocks and markets you trade.
This type of “Game-Planning” logic is what I’ll be describing in Thursday January 31’st educational webinar (intraday planning and day structure).
Corey Rosenbloom, CMT
Afraid to Trade.com
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