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Fibonacci Long Setting Up For Gold

2019 has already been a big year for GOLD, with values testing the 1300.0 level. Investors are treading carefully into equities in the wake of last December’s volatility. As a result, bullion has become an interesting bet for the new year. While the price action in February gold futures has been chaotic near a long-term level of Fibonacci resistance, this market remains in bullish territory for the time being.

In an update from last week facing February gold futures, I outlined the importance of the 1300.0 level. As of now, price has rejected this area of topside resistance and is headed toward a key Fibonacci support level. Let’s dig into the technicals and see if we can identify a way to capitalize on the action.

Fibonacci Support In View For February Gold Futures

Friday’s trading session was an active one for bullion, featuring a failed auction above 1300.0 and subsequent selloff. Today’s trade has been much more subdued.

February Gold Futures (GC), Daily Chart
February Gold Futures (GC), Daily Chart

For the near future, there are three levels on my radar:

  • Resistance(1): 50% Retracement Of 2018’s Range, 1292.9
  • Resistance(2): Psyche Level, 1300.0
  • Support(1): 38% Current Wave Retracement, 1276.0

Bottom Line: Joining a prevailing trend is almost always a good idea, assuming solid trade location. The uptrend in gold is valid and going long on a pullback isn’t a bad way to play it. As long as the Swing High at 1300.4 remains intact, I will have buy orders queued up from 1276.6. With an initial stop at 1274.8, this trade produces 36 ticks using a 1:2 risk vs reward management plan.

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Shain Vernier
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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