Gold continues to hold strongly just underneath the important
$1,462 energy level, as Tuesday was another narrow-range
consolidation day right around this level.
The 150-minute chart has been fully consolidated for a while,
with the fractal dimension holding steady at very high levels,
around 70. This tells us that the consolidation has been very tight
and "non-trendy", with prices oscillating with no clear direction.
This becomes important information to know when we realize that
markets constantly alternate between periods of consolidation (from
point A to point A), and periods of trending, linear movement (from
point A to point B).
The 150-minute chart is telling us that $1,462 is likely only a
temporary barrier, and if it gives way there should be plenty of
energy behind the move. The daily chart also confirms that there is
energy to move higher, easily as high as the next major fractal
target at $1,500.
However, there is also a major precedent for gold to come back
down for a quick 38.2% retracement to test the breakout at $1,442.
In a real way this would be the "easier" bullish path for gold to
follow, as it would take care of the necessary 38.2% retracement
right away, potentially avoiding a more serious pull-back down the
road.
Although it seems unlikely, a breakdown back under $1,441 would
be problematic for gold in this situation, as that would look like
a failed breakout, which often leads to a dramatic drop.
So all in all, gold looks like it is gearing up for a further
run higher, but we can't rule out a quick retracement back down to
$1,442. Although it seems counter-intuitive, a quick retracement
right here that easily holds $1,442 would ultimately be more
bullish for an extended upside move.
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Fractal Gold Report
Posted by tims69 on 7th of Apr 2011 at 06:36 pm
Gold continues to hold strongly just underneath the important $1,462 energy level, as Tuesday was another narrow-range consolidation day right around this level.
The 150-minute chart has been fully consolidated for a while, with the fractal dimension holding steady at very high levels, around 70. This tells us that the consolidation has been very tight and "non-trendy", with prices oscillating with no clear direction. This becomes important information to know when we realize that markets constantly alternate between periods of consolidation (from point A to point A), and periods of trending, linear movement (from point A to point B).
The 150-minute chart is telling us that $1,462 is likely only a temporary barrier, and if it gives way there should be plenty of energy behind the move. The daily chart also confirms that there is energy to move higher, easily as high as the next major fractal target at $1,500.
However, there is also a major precedent for gold to come back down for a quick 38.2% retracement to test the breakout at $1,442. In a real way this would be the "easier" bullish path for gold to follow, as it would take care of the necessary 38.2% retracement right away, potentially avoiding a more serious pull-back down the road.
Although it seems unlikely, a breakdown back under $1,441 would be problematic for gold in this situation, as that would look like a failed breakout, which often leads to a dramatic drop.
So all in all, gold looks like it is gearing up for a further run higher, but we can't rule out a quick retracement back down to $1,442. Although it seems counter-intuitive, a quick retracement right here that easily holds $1,442 would ultimately be more bullish for an extended upside move.