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The next couple of trading days look important for gold from a cyclical perspective. Several medium and short-term studies suggest it is prone to a turn of some sort during this timeframe. With strong resistance just overhead at 1301/16 (50% retracement of the 2008 to 2011 advance and 4th square root progression of year-to-date low) we favor a top. Given the corrective nature of the advance from the June 28th low the anticipated turn should provide a good opportunity to align with the broader downtrend in place since October. Weakness below this week’s low near 1270 will confirm that a top is in place, but a close under a key Gann support level at 1248 is really required to signal that a more meaningful decline is underway. Strength in XAU/USD beyond 1316 after Tuesday would invalidate the cycle turn window and shift our focus higher.
XAU/USDDaily Chart: July 19, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk Next Week:
Source: DailyFX Calendar
LEVELS TO WATCH
Resistance: 1316 (Gann), 1347 (Fibonacci)
Support: 1270 (Weekly low), 1248 (Gann)
STRATEGY – Sell XAU/USD at 1312
Stop: 1-day close above 1316
Target 1: 1248
Target 2: 1218
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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- Basic Materials Industry