Pric of Gold has good chance od breaking below $880

The price of gold moved through last week’s first level of support at 930, not before spiking up to nearly 988, and then retreating rapidly down again.

As I write, the market is reacting slightly to the 50% level of the price wave that began on January 15th at 801.50 and ended on February 20th at 1007.70. At the moment the upwad reaction to the 50% level seems weak, so I expect that at most, within a few days the market will reach 880.

Support at 880. should cause a more dramatic rise in price. Old support is in this area, as well at the rising trend line and a confluence of several Fibonacci ratios. Short term the market is oversold. Will the support around 880. be enough to send gold spiraling to a new high. Probably not. There is a very good chance that support at 880. will be broken within the next several days or weeks, in which case the 700. level could come into play once again.


Daily Gold chart as at 5 March 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
Stochastic – over sold
NextView RSI – in negative territory, rising slightly
EMA 20 – at the R1 resistance level and flattening out.
R1 – 930.
R2 – a resistance zone between 986. – 1007.
S1 – 880.

****

Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Come and visit Don Schellenberg at ATIC Kuala Lumpur on the 14th and 15th of March 2009