Gold finds support but is this the turning point?
Gold has bounced off the long expected 61.8% Fibonacci support at $1,910, but where now? Could today’s candle be the turning point indicator?
(Video Transcript)
European Central Bank
One of the big events this week is in the Portuguese resort of Sintra. We had a lot of central bank meetings this week. Christine Lagarde will be heading up the meetings as the head of the European Central Bank. It's the European Central Bank Banking Forum. But what I think is likely to happen is that we could well end up continuing to hear the words that we've heard recently from central banks: that they remain hawkish on interest rates.
Hawkish to the point, I think, that the markets just aren't pricing in at the moment, some of which affect the currency markets we're looking at. It's also quite interesting to look at what's happening in the currency markets.
Gold
I want to take a look at gold now and this chart here because we have, as of Friday's low point, bounced off this line of support. I've been talking about an early morning call now for a week or so—a couple of weeks or so at this 1910 level, the Fibonacci support line, 61.8% retracement.
I've taken it from the lows that we had back on the 28th of March when we saw this establishing its foothold here and the low point at 1804, and the swing high came with the record highs we saw at 2082 back on the 3rd of May.
Market drop
Since then, there has been a pullback. Look at the bounce we had on Friday; it was partly a convincing bounce, and then came a drop in the market. The market did actually end up on Friday at the moment where it was trading at 1923.
I think today's candle is going to be key. I think if there's any weakness developing in the candle shape today, pointing back down to this line of support, then I think we've got a continuation of this short position all the way down to this line of support down here at the 76.4% retracement at 1870.
Gold line of support
Due to the fact we had a relatively convincing bounce on Friday of this line of support, I think I'm going to wait to place any further trades on gold until I get a full idea of what this bounce means and whether it's going to hold. But I think it could be key. I think if you are short on this market, your stock would go above this sort of air up here in 1970 or so.
If you're short on this with a view to taking it down to this line of support, I'd be cautious about that until we work out whether or not this line at 1910 is going to hold for more videos from us here at IGTV.
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