After the dreadful events in Paris the market participants are once again turning to the oldest of safe haven plays, gold. This morning gold price jumped higher with a gap opening and is trading now 1.25% higher than it closed on Friday. Such a strong opening after price has found support from a previous low is usually a sign of higher prices to come. Another factor that’s likely to have played some role in today’s gold rally is the fact that Japan’s GDP tumbled 0.8% in Q3 (q/q). The drop was much larger than anticipated and comes in the context of Japan, one of the largest economies in the world slipping yet again into a recession.
While writing this Gold almost reached the nearest resistance level at 1097.70 and reacted lower. The next resistance level is at 1103.80 while the 1073 level is the nearest significant daily support. These nearest resistance levels coincide with the 23.6% Fibonacci support level at 1101.20 (as drawn from the October high to the latest low), and the 50% Fibonacci retracement at 1132.50 coincides with a 50 day SMA.
A break above the 1103.80 resistance could bring the 50% retracement level into play but I’m interested on price reactions at supports after a possible pull back closer to supports. If price pulls back at or below 1089 we should be looking for long entry signals as per my teachings in the webinars. Should this happen the proximity of 50% Fibonacci level and the moving averages at 1133 and 1139 act as a target area for swing trades, while short term traders might want to consider 1097 to 1103 as a target range.Publication source