Talking Points
Gold approaches near-term resistance- Rally vulnerable below $1361
March opening range in focus- break to validate near-term bias
Major Event Risk on tap this week
Gold Weekly Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
Significant resistance at $1357/61- Topside bias at risk below this mark
Breach targets resistance objectives at $1381, $1400, $1415/33
RSI trigger(s) set- Ongoing divergence suggests long-side is vulnerable here near-term
Support at $1320/22, 1300/06- bullish invalidation
Break sub-1268/70- bearish
Key Events Ahead: Central Bank Rate Decisions from RBA, BoC, BoE & ECB and NFPs on Friday
GoldDaily Chart
Notes: Gold is up more than 12% year-to-date and the advance through the $1268/70 threshold last month played out extremely well with the precious metal surpassing all our topside objectives noted in late-January. The focus now shifts to the $1357/61 resistance range which is defined by the 100% extension of the advance off the February 20th swing low, and the October high. Note that operative channel resistance and a longer-dated trendline resistance dating back to the 2012 high also converge on this range over the next few days.
Interestingly over the past six months, the monthly performance in gold has followed that of the first day of trade for that month. Now that’s not to say you can’t have a volatile month like we saw back in October- but still, the tendency remains. We’ll look for the weekly and monthly opening ranges to offer clarity on our medium-term bias heading into March while noting that a break below $1320 will shift our immediate focus lower. Such a scenario looks for more favorable long entries around $1300. The broader bias remains constructive above $1300/06 with only a move sub- $1268/70 suggesting a more meaningful high may be in place.
A breach above the October high at $1361 keeps our topside objectives in focus with resistance targets seen at $1381, $1400 and at $1415. A breach/close above the August high at $1433 puts a double bottom scenario into play eyeing targets at $1487, $1550/60 and ultimately $1664/85. Bottom line: the rally remains vulnerable below $1357/61 with our attention now set on the March opening range as we head into major event risk this week. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.
Key Threshold Grid
Entry/Exit Targets
Timeframe
Level
Significance
Bearish Invalidation
Daily
$1357/61
100% Ext / Oct High / TL Resistance
Resistance Target 1
Daily
$1375
9/19/2013 Pivot High
Resistance Target 2
Daily
$1381
161.8% Ext
Resistance Target 3
Daily/ Weekly
$1400
161.8% Extension
Resistance Target 4
Daily/ Weekly
$1415/17
38.2% Retracement / Aug Close High
Resistance Target 5
Daily
$1433
August High / (Double Bottom Scenario)
Resistance Target 5
Daily/ Weekly
$1487/93
50% Retrace / May High / 100& 200 WMAs
Resistance Target 5
Daily/ Weekly
$1550/60
61.8% Fib Extension
Resistance Target 5
Daily/ Weekly
$1664/85
78.6% Retrc / 200% Dble Bottom Objective
Support Target 1
Daily
$1336/38
100% Ext / 61.8% Retracement
Support Target 2
Daily
$1320/22
Friday Low / 61.8% Retrace
Bullish Invalidation
Daily
$1300/06
61.8% Ext / 50% Retrace / 200DMA / TL Sup
Key Inflection
Daily / Weekly
$1268/70
61.8% Retrace / 50% Ext / 100DMA
Other Setups in Play:
EURJPY Rally at Risk Sub 141- Weekly Opening Range in Focus
USDCAD Reversal Underway- Long Scalps Favored Above 1.10
GBPAUD Weekly Range in Focus- Bullish Scalp Bias at Risk Sub 1.86
GBPCAD Challenging Feb Range High- Scalp Bias Bullish Above 1.8037
AUDNZD Target Key Resistance- Bullish Scalp Bias at Risk Sub 1.09
—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list
Join Michael for Live Scalping Webinars Tuesday-Thursday mornings this week on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)
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Source: Daily fx
