Based on the early price action, the direction of the gold market into the close will be determined by trader reaction to the main Fibonacci level at $1350.20 and the minor Fibonacci level at $1340.50.
June Comex Gold futures are being driven lower by increased demand for higher risk assets on Tuesday. A strong recovery in the U.S. Dollar is also making gold a less-desirable investment. The Greenback was helped by a drop in the Euro.
The main trend is up according to the daily swing chart, however, momentum has been sideways the past four sessions.
A trade through $1369.40 will signal a resumption of the uptrend. The main trend will change to down on a move through $1322.60.
The minor trend is up. A trade through $1353.50 will signal a resumption of the minor trend. The minor trend will change to down on a move through $1335.50.
The price action is being controlled by a pair of retracement zones. The main retracement zone is $1342.40 to $1350.20. The minor retracement zone is $1346.00 to $1340.50. These levels have been acting like pivots, resistance and support the past 5 sessions.
Based on the early price action, the direction of the gold market into the close will be determined by trader reaction to the main Fibonacci level at $1350.20 and the minor Fibonacci level at $1340.50.
A sustained move over $1350.20 will give the gold market an upside bias into the close. This could lead to a test of $1353.50. This is the potential trigger point for an acceleration to the upside.
A sustained move under $1340.50 will help form a strong downside bias with $1335.50 the next target.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.