From Kitco News
Technical Trading: Gold Bulls Run Into Sticky Fibonacci Resistance
(Kitco News) - December Comex gold futures charged into early morning action Monday with a firm bid. Action over the last two weeks has shown the bulls are in charge of the near term trend. A "V" type of bottom has formed on the daily chart in the wake of the strong October 6 "bullish reversal" day. Also, the gold market is trading above its 20-day and 40-day moving averages, which is a positive technical signal. See Figure 1 below.
But now, gold bulls are testing initial 38.2% Fibonacci retracement resistance, shown in Figure 2 below. This Fibonacci retracement is drawn off the July 10 high to the October 6 low. The first retracement point —or 38.2% comes in at $1,246 per ounce. Currently, the bulls are "testing" that resistance zone. A solid push through the 38.2% retracement point would open the door to additional retracement targets at 50% ($1,265.40) and then 61.8% ($1,284.80).
On the downside, important chart support points are seen at $1,232 and then $1,222. The bulls need to defend those support floors to keep the near term technical bias bullish.
Bottom line? Gold tested and found strong buying interest at long-term support in the $1,180 area in early October. A near term bottom has formed on the daily chart. Daily momentum studies are generally rising and positive, but the market has run into initial Fibonacci retracement resistance. This zone could act as a "sticky" ceiling in the very short-term. But, if gold bulls are able to post a convincing close above the first retracement point, near term trend followers will become emboldened. Monitor chart supports at $1,232 and $1,222. As long as those support floors hold firm, the bulls have the edge.
By Kira Brecht, Kitco.comFollow her on Twitter @KiraBrecht
Gold Bulls Run Into Sticky Fibonacci Resistance | Kitco News
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