Gold Plunges, but Lands at Key Fibonacci Support - is a Bounce Coming?


Chart prepared by Christopher Vecchio using Marketscope 2.0

Are you new to FX or curious about your trading IQ ?

FOREX Analysis : Gold has dropped by -25% this quarter. Call it what you will, but these are liquidation type conditions, not the hallmark of rational investing. With that said, Gold has fallen into the 10/20 RSI support region, where price has held on numerous probes lower ultimately producing a short-term rally. More recently, daily RSI has only dipped into this region in mid-February and mid-April. Accordingly, because the trend is still down, we look for any rallies in precious metals to be sold until sufficient technical evidence mounts to warrant a suggestion otherwise.

FOREX Trading Strategy : It is possible, however, that a near-term bottom in Gold may be around the corner. Basing just below $1200/oz shouldn't be dismissed, as at 1189.91 lies the 100% extension of March high/April low/April high move, as well as the 61.8% extension of the October high (post-QE3 announcement)/April low/April high move at 1192. Time is a factor of course, and the longer Gold lingers near these key levels, the higher the probability of a break towards 1000.00/25.

--- Written by Christopher Vecchio, Currency Analyst

To cont act Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

forex news currency trading

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Commodities

More from DailyFX




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by