Throughout the past month we've been tracking the progress on gold, identifying key resistance levels and the implied upside targets on a break of that resistance. Track back over the last few articles published here if you'd like an overview of how this market presented information which allowed us to take profitable low risk long side trades.

Here’s a current daily chart of NYSE-Liffe mini gold, the YG contract:

Click on image to enlarge!

Price reached the target overlap of the swings identified by the red trendlines. A target overlap often serves as a price magnet, pulling price to that point to complete a pattern. Once the target overlap is met, it’s important to see whether or not the same area serves as resistance.

On the pullback from that target zone, we use our retracement tool to plot the next resistance levels. From the July 19th high to the July 20th low, the key .786 retracement level comes in at 1604.80. That would need to break in order to call the next upside targets into play, so it serves as key resistance in the way of a continued rally. Very often when a market attempts to rally through a significant prior high, the failure point is right at that .786 retracement! That’s currently being tested, and we’re monitoring shorter term charts for the strong possibility of triggers to the short side.

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