By Shufaad, 25 September, 2011
Good day traders!
Lets look at our daily gold chart:
- I drew a fibonacci retracement level from point A dated 1 July 2011 till point B dated 6 Sept 2011.
- After registering the lowest level since August at $1628, price rebounded nicely at our 61.8% fibonacci level at $1647 and close the week at $1656.
- From the daily perspective, nearest resistances are found at 8 Aug 2011 gap at $1682 and psycho level $1700. The said psycho level is decisive since it is leveled with our fibo level 50.0%. Breaking that level would push the price towards $1750/52 zone (fibo level 38.2%), strong psycho at $1800 and fibo level 23.6% at $1816.
- I would strongly stress here that both psycho level $1700 and $1800 plays a major role in the traders sentiment versus bargain hunting appetite.
- Going south, Friday’s low at $1628 should provide the first support before a marching towards another psycho level at $1600. Further down, $1577 and $1550 should provide the needed support.
- Gold is still in long term trend with the trend line drawn from 28 Jan 2011 is still much attach.
- While the twist program seem to lure some traders to sell 0ff their gold, I’m looking at it as a short term correction. With the recent lower price, gold bargain hunters are looking ready to steps in.
While I’m bias to the upside, a potential drop towards $1600 is possible and I expect a mighty bounce from the said level.