As discussed in previous articles, the 1553 level defined the top of consolidation on gold. While the second test of that level held, triple tops are not very common and a third test was likely to lead to a break!

Here's the current daily chart for YG, the NYSE-Liffe mini gold contract:

Click on image to enlarge!

The resistance at 1553 was defined by the .786 retracement of May 2nd high to the May 5th low. Once this was broken, we’d look to the 1.272 price extension of the same swing as at least an initial upside target; 1608.30 as labeled on this chart. It’s important to note that there’s also a second target from a smaller swing lining up just above that larger target. 1609.40 is the 1.618 ratio target of the June 22nd to July 1st high to low. Very often when targets show as a near overlap they can serve as “price magnets” initially, and then hold as resistance once met. It would be a good idea to manage any longer term longs carefully once that target zone is met. Scale out, tighten stops, etc. We’ll have new support on the charts at that point to assist with the best stop placement based on Fibonacci ratios from the closest low to high swing.

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