For the past two weeks Gold futures have been playing with a key zone from $1245-$1255 – the first Fibonacci retracement – but unable to move much above it, reluctant to fall much below.
Last week, for example, gold futures opened the week at $1247.70 and ended at $1251.40, which is pretty much the definition of an undecided market.
We identified this key area for our members as a resistance level, and it has provided some profitable trades (see chart). Now the question is what happens next.
Our best guess: more of the same. There could be a break-out in either direction, and there has been some pressure to the upside, but until we see evidence of a decisive move, this long consolidation pattern is likely to continue.
If there is a break-out, we think it will be relatively modest. For an upside break-out, we see a possible target around $1268-70; on the downside, if we see the price drop below $1235, the likely target is a retest of $1200.
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