Gold Update July 2016 (D)
Created on Thursday, 07 July 2016 11:36
Written by Austin Galt
The gold price looks to have set up a high which I believe to be the point 5 top in a 5 or more probably 7 point broadening top formation. Let’s briefly review the daily chart.
GOLD DAILY CHART
We can see the 5 point broadening top in play. While this may be the final high it is my belief that it will eventually morph into a 7 point broadening top. That means I favour price to now head down to put in a point 6 low.
I have drawn a Fibonacci Fan from the low to point 1 high which seems to be showing some nice price symmetry. The point 4 low was around support from the 61.8% angle while this point 5 high is right at resistance from the 38.2% angle. I favour the point 6 low to be around support from the 76.4% angle.
I have added Fibonacci retracement levels of the whole move up. While it is possible for a higher low to form, I personally favour the point 5 low scenario and hence the 61.8% level at $1172.26 looks like a good target. Price may pull up just shy or even marginally clip. As it stands currently I favour the former.
The 100 period moving average (red) has provided recent support for price but I favour it will give way on the next attempt with the 200 period moving average (black) saving the day.
The Bollinger Bands show price threatening to pull away from the upper band but that is not confirmed yet.
The RSI shows a triple bearish divergence at this high which often leads to a significant decline.
The MACD indicator is currently bullish although price moving down from here will see a bearish crossover in short order.