April Gold broke through the support line of a triangle chart pattern and is now in a position to weaken further into a Fibonacci price level. If this level is broken, the market may accelerate to the downside.
After several days of consolidation inside of a 50 percent to 61.8 percent retracement zone, April Gold appears to be making its move to the downside. The impending break will be a continuation of the current downtrend which began several weeks ago. At this time, the 50 percent level at $1659.45 is resistance while the Fibonacci level at $1628.00 is support.
A pair of Gann angles is also combining to form a triangle chart pattern. A downtrending Gann angle from the $1792.70 top is providing resistance at $1658.70. An uptrending Gann angle at $1640.20 has been violated, setting up the market for further downside action.
Now that the support angle has been broken, April Gold is set up for a possible acceleration to the downside. The current chart pattern suggests that there will be plenty of room to the downside once $1628.00 is violated. If this move takes place as anticipated, then traders should look for a possible break into another uptrending Gann angle at $1583.20.
The triangle chart pattern is a non-trending pattern. The gradual narrowing of the support and resistance lines compress the price action often leading to a volatile move. Traders typically “go the way of the move”, but in this case since the main trend is down, traders have been expecting the market to break. Now that support has been penetrated, traders should look for increased volatility coupled with rising volume to drive this market lower.
