While many analysts have discussed the recent double top on Gold, it's helpful to keep track of key Fibonacci levels since we knew well in advance that area could serve as formidable resistance. We'll use the NYSE Liffe YG mini Gold contract for August since the ease of accessibility and reasonable price per tick makes this a popular choice with intraday traders, but the concept applies to all gold related instruments.

Here’s the current daily chart:

Click on image to enlarge!

The double top was established at the .786 retracement resistance derived from the May 2nd high to the May 5th low. Since this was dropping from such an extremely extended high, we knew that the first attempt to break to new swing highs could run into trouble, and the .786 resistance is always the key level to watch for a possible hold if we’re not going to get those new swing highs. The subsequent drop on the retest came right down to the 1.272 target extension from the swing into the high as shown by the red trendlines. Note that since this target at 1498 came in above the key .786 support at 1484, we don’t have any additional downside targets in play. It would take a break of that key support level to focus price on the target at 1437. So at the moment this is range bound between key .786 support and resistance, the definition of consolidation.

Meanwhile intraday traders can focus on the 60 minute chart seen below:

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At the moment this chart is maintaining a pattern of higher highs/higher lows. The key challenge to shorter term upside is the 1519 resistance highlighted on the chart. A break there would target 1536. Should this start to drop instead, a break below the highlighted 1496 support should lead to the downside target at 1484 which also overlaps the key daily support. Meanwhile, as long as those two highlighted levels are intact, the daily consolidation is “trickling down” to intraday since price is currently holding between key support and resistance levels on the 60 minute too. Be very careful assuming follow through until we see one of these levels break, and consider using those support and resistance levels as shorter term targets too!

For more from Mark including his “Chart of the Day”, visit MJBraun.net.