Included below is current daily chart of the NYSE-Liffe December mini Gold contract; the YG. The red trendlines show how the key .786 retracement support ratio was derived. It's 78.6% of the last outstanding swing low before the high as a retracement from the high itself.

Click on image to enlarge!

Price was unable to close below this level on the last attempt, and on daily and higher timeframes we look for a close to confirm a break of key levels. If we do see a close below this point, the initial target extension from the same swing lands at 1359.30. We can certainly see why the current daily swing low is a strong area for a debate regarding additional downside!

The hold at .382 resistance, 1685, encourages the idea that there’s a good deal of interest in additional downside. So does the 50 CCI position at -168, well below the -100 line. Still, the CCI is somewhat extended and this configuration may be a bit of a warning about a bounce before we can see more downside.

Let’s see if we can find clues on an intraday chart:

Click on image to enlarge!

The trendlines show an upside target in play at 1782 on this 60 minute chart. 1566 is the key support in the way of a retest, and break, of the current daily swing low. If the 1566 breaks first, we’re most likely to see the daily support break too. But the most likely scenario here is that we’ll see the 60 minute upside target and THEN need to evaluate new support for a hold or break on a pullback. A break of 1658.90 would confirm that upside is favored for the moment and we’d focus on price action after 1782 is met.

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