Now that we’ve rolled to the August contracts on gold, it’s time to look at the new targets and overall support and resistance scenario. Here’s the ZG daily chart:

Click on image to enlarge!

I’ve drawn a trend line from the December high to the February low to show how the upside target at 1262 was calculated. Usually when we see the .786 retracement of a high to low swing broken, the target is the high to low multiplied by 1.272. We almost made this target, but the very extended CCI at the high in May warned that a pullback along the way was likely. Price held at retracement support and didn’t even need to test the major support zone beneath the swing low established on May 21st. The 34 period exponential moving average, a number that works particularly well with other Fibonacci ratios support and resistance factors are in the picture, also provided additional support.

This next high to low swing shows a target a little above our longer term target; 1273. We’ll have additional confirmation that this target is in play once we see a break of the .786 resistance at 1233. Since the prior .786 resistance from the larger swing has been broken, and we haven’t met the implied 1262 target yet, it’s more likely that we’ll see a break of this next .786 resistance as well. That’s an important Fibonacci based consideration in evaluating the current price pattern.

Let’s step down to the 60 minute chart in order to zoom in on price action at this juncture:

Click on image to enlarge!

The current swing failed at the .618 resistance of the high to low pivots. This actually sets us up for stronger support; a Gartley pattern. The emphasis is on the downside targets of the prior low to the high at the .618 failure point, 1208 – 1212. This is a classic ABCD correction, but since those target levels mix in with strong retracement support from a larger low to high swing, we can consider this a perfect Gartley support pattern. At the very least this is a warning against getting too excited about short side if the prior pivot low is violated. Combined with the earlier resistance breaks from larger swings on the daily chart, we’re more likely to see a support hold on the intraday if this area is tested.

If you’d like more information on the Gartley pattern, make sure to check out the Gartley webinar video on the Examples and Vids page of my site!

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