Updating Gold’s Structure and Key Inflection Level

Jan 29, 2013: 11:27 AM CST

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

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!


4 Responses to “Updating Gold’s Structure and Key Inflection Level”

  1. Friday, February 1 2013: Why you cryin' bro? Got kicked in the NUGTs. Says:

    […] 613 Good morning all. Here is a Gold perspective: Updating Gold’s Structure and Key Inflection Level | Afraid to Trade.com Blog […]

  2. TheLazy Trader Says:

    Great article….suffice to say, trade what you see not what you think!

  3. theyenguy Says:

    A nascent investment demand for gold has commenced, as is seen in the chart of the gold based ETFs, UGL, and DGP, trading higher, as Gold, GLD, has been trading higher since January 1, 2013; it’s chart shows that it stands at the apex of a consolidation triangle at 161.50, with support at 160. Spot Gold, $GOLD, is trading at is 200 Day Moving Average at $1,660

    Perhaps one might enjoy my Friday February 8, 20133 chart article Stocks Trade Lower On Fears Of Eurozone Financial And Political Instability

  4. Peter Thompson Says:

    Interesting analysis on Gold. In terms of hard assets, its good to have a nice mix though, including some things like forestry or farmland investments – http://www.greenworldbvi.com/a