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FIB EXTENSIONS - A LOOK AT WHERE GOLD COULD BE GOING

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If anyone ever has a doubt about the validity of Fib Extension's - I urge you to take a look at both the Gold Weekly and Daily chart for a start.

I decided to take a look at Gold over the last 8 year or so. I took away all the support and resistance level's I had previously and decided to chart Fib extensions running from the low-high from mid 2005 until more recently in Sep 2011 - this is what I saw->

b2ap3_thumbnail_GOLD_-_WEEKLY_FIBS_-_27-6-13_002.png

 

As you can see, there have been two key support area's so far from recent high's. It is absolutely no coincedance that these two levels are consistent with the first 2 Fib retracements. The recent break of the 1300 area would indicate that more low's are to come, with the next area (imo) being the 50% (and the 50% area is commonly referred to as one of the most important area's in Fibonacci theory) fib retracement at the ~1150 area. This area is highlighted in green on the chart. We can also see previous S/R level#s in this area from around 2009-2010.

If we take a wee closer look at price action on the daily, we can see these area' further confirmed ->

b2ap3_thumbnail_GOLD_-_DAILY_FIBS_-_27-6-13.png

These level's can be clearly identified and I think anyone studying Fibonacci could utilise the GOLD chart.

Trading idea's.

Well that is up to the individual and the experts. Personally the first thing I have is a buy order at ~1160 with a 50 pip stop targetting 1260 initially, which is a previous resistance area from 2010. 

However, more medium term, I see the 50% fib acting as good support, and the catalyst for a corrective wave. This corrective wave could target multiple area's - perhaps the 50% fib from the high to the low move most recent (Oct 12 until present). Perhaps the 100 or 200sma (perhaps both if they meet). Perhaps just a slow, almost ranging move back up to the previous 38.6% fib area of 1300-1350 region. Perhaps it won't correct at all.

Fact is, no one knows. But having certain scenario's mapped out in your head, or on some paper, can only be a benefit for the future planning of your trades.

My bias at the moment points towards a corrective bounce from these area's - but perhaps the EWT guys will have a different viewon things. 

But one thing I think we can take from the above charts is the validity of Fib extensions when they work.

Tagged in: Fibonacci Gold Long term
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Guest Monday, 12 November 2018