Chart of the Day
Gold Daily Chart — November 4, 2009
By
James Chen
, Published:
11/04/2009
(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
11/04/2009 – Gold – Late last week, price action on spot gold (a daily chart of which is shown) formed a bullish engulfing pattern right at strong support in the 1025 region, which represented previous resistance. After that bullish engulfing pattern established the new support level, which also coincided with a key 50% Fibonacci retracement level, price shot up this week to overtake the previous all-time high above 1070. Currently having just established a new all-time high above 1095, price on gold is now shooting for greater heights, potentially around the 161.8% Fibonacci extension of the most recent bullish run. As price is now in uncharted territory again, this key Fibonacci extension, which places the upside technical target around 1125, serves as further upside resistance. At this juncture, however, the potential for a bearish correction is significant. But with Indian demand for gold helping to prompt the recent bullish run, and potential Chinese demand possibly fueling a continuation, the overall directional bias continues to be bullish.
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James Chen, CMT
Chief Technical Strategist,
FX Solutions
Chief Technical Strategist,
FX Solutions
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