Let’s take a moment to update the prior post “Trade Planning and Levels to Watch in Gold” with respect to the new price compression between daily moving averages, a key Fibonacci Level, and an active trendline all aligning at the same level.
We’ll start with the broader Daily Chart:
First, let’s focus on the price compression between the flat 50 day EMA ($1,333) and the rising 20 day EMA ($1,306).
To expand the key levels to easier to reference price points, we’ll refer to $1,300 (key support) and $1,350 (key resistance).
I included a Zoomed-In chart specifically highlighting the 20/50 EMA compression levels on the left side of the chart.
Simple trade planning for the future derives from these levels:
A bullish breakthrough above $1,350 continues the counter-trend reaction toward the $1,400 target while a pro-trend breakdown under $1,300 triggers a third “Bear Flag” retracement entry with a target toward $1,250 then $1,200.
Going beyond the EMA and price levels, we note the ongoing negative divergence with price during the counter-trend rally toward $1,350 which tips the scales to the downward/bear flag thesis.
The picture is the same in the tradable Gold ETF (symbol GLD):
We can see that the specific daily EMA levels for GLD are $128.90 for the flat 50 day EMA and $126.35 for the rising 20 day EMA.
Price has compressed so far between these levels ahead of a tradable or expected breakout up above $130 (entering “Open Air” toward $137.50) or down beneath $126 (targeting $120 then $115 for the ETF).
We can also see volume diverge or decline relative to the entirety of the July counter-trend rally.
Finally, let’s drop to a price-specific Daily Chart with two Fibonacci Reference Grids:
In addition to the flat 50 day EMA, we see a short-term 38.2% Fibonacci Retracement (green) into the $1,348 ($1,350) futures contract level.
So far, that price has marked the intraday swing high of the recent counter-trend reaction. We’ll still need a firm break under $1,300 for a confirming signal.
We’ll be monitoring price movement down away from the $1,350 level and especially beneath the $1,300 level in the event that we do see a breakdown soon.
Otherwise, buyers could again step in to find value above $1,300 and continue this short-term ‘range’ or ping-pong intraday plays between the broader $1,300 and $1,350 levels.