Gold Under Bearish Pressure: The 161.8% Retracement
Orlando Gutierrez | Feb 27, 2017 04:00AM ET
- Gold is up 3.6% for the month
- Gold is up $100 since January the 1st
- If you notice Gold always retraces at the 161.8%:
- Point C of rally is the 161.8% retracement of the AB move.
- Price then goes and rallies $64 to point D which is the 161.8% of the BC move.
- At this point price retraces and test a previous base to point E to rally $45 to the F point which is the 161.8% of the DE move.
Gold opened the week inside of a consolidation zone at the top of the move from last week. This doesn´t mean much until we look at the levels price has hit and last week, interestingly enough price hit the $1260 bar where bulls quickly took profit and price is now $6 off those highs.
Why is this level so important?
First of all the 1260 is a big psychological level which means that we are bound to see some thick action around it. Secondly, if you look at the daily chart that level is a pretty solid base in historic price action. A retest of that previous base as resistance is expected (trading 101).
But I like to see beyond those levels, I like to see inside a nice trend like this one and look at it´s cycles. Here´s the 4H chart
Firstly, the A-B-C-D-E-F annotations on my chart are not wave counts; they´re there to make it easier to explain the cycles I´m looking at.
This is where we are right now retracing from the $1260 and 161.8% (F) back to test a previous base just like we did in the DE move. If this cycle in price continues it would mean that the next point (point G) would be at the previous base at around the $1242 level.
I¨m not trying to predict future price action but this is the spot I´m looking at to jump in. Trade safe.
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