Gold Consolidates At Daily 38% Retracement - Forex News by FX Leaders
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Gold Consolidates At Daily 38% Retracement

Posted Monday, February 25, 2019 by
Shain Vernier • 1 min read

It is becoming a theme, but April gold futures have once again entered rotation near a key 38% retracement. For the second time this month, bullion is tightening up around a Fibonacci support level, bringing tight conditions to metals traders.

Last Thursday’s epic sell-off in April gold signaled a pending correction and bullish fatigue at the 1350.0 big-round-number. Since that time we have seen a nice bounce from 1325.0 and a compressed market on the daily timeframe. Let’s dig into the technicals and see if bullion is ready to break out once again.

The 38% Retracement Is Big For April Gold Futures

At press time, the 1332.6 handle is looming large for April gold. The daily range is an ultra-tight 76 ticks and 1332.0 is driving two-way participation for the second straight day.

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

As you can see from the chart, a daily consolidation pattern is setting up in bullion. This is similar to what occurred near the 1312.0 area during the early stages of February.

Overview: At the moment, I maintain a bullish bias in April GOLD. While price is technically beneath the 38% retracement, it remains in the immediate vicinity. In the event that gold trades within Friday’s range, I will be looking for a breakout to develop above today’s high or below today’s low for Tuesday’s session.

It is a stretch to think that bullion is going to consolidate for the entire week. Given the market-moving events on the economic calendar, I expect either a test of the Swing High (1349.8) or a plunge toward daily support near 1320.0. Either way, we should have several trading opportunities by Friday’s closing bell.

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About the author

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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