gold

Fibonacci Resistance Level In View For Gold

Posted Friday, May 4, 2018 by
Shain Vernier

The markets are continuing to echo the strong sentiment of the April U.S. Jobs report. The USD is performing well and indices are extending early gains. June gold futures have attracted some bids, shifting price moderately to the bull. At press time, June gold is trading in a tight 84 tick range.

Variations in gold pricing going into the weekly close can be very instructive to the degree of risk market participants are willing to assume. Traders are currently non-committal to bullion, preferring to take equity longs home for the weekend.

Gold Technicals

Both oil and gold have posted back-to-back winning sessions since Tuesday’s commodity sell-off. A strong close this afternoon will ensure a three-day winning streak for the first time since early April.

gold
June Gold Futures (GC), Daily Chart

With 1300.0 in the rear-view mirror for the time being, gold may have posted an intermediate-term bottom. Here are two levels to watch as we roll into next week’s trade:

  • Resistance(1): 38% Current Wave, 1324.0
  • Support(1): Psyche Level, 1300.00

Bottom Line: From a technical perspective, I maintain a bearish bias for gold. While the last three sessions have been positive, a hard test of 1300.0 looks to be in the cards for next week.

A short trade from 1323.4 is a good way to join the prevailing trend. Due to its proximity to the 38% Fibonacci retracement, this level is highly likely to attract sellers. With an initial stop at 1327.6, this trade yields better than 40 ticks using a 1:1 risk/reward management plan.

Early next week is set up to be an active period for the bullion markets. With a bit of luck, a spike in gold will give us a chance to grab a few ticks before a return to 1300.0.

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About the author

Shain Vernier is our US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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