Gold fell about $14 in the last 15 or so minutes after failing to solicit buying interest above the 200 hour MA and the 50% retracement (of the move up from the March 22nd low). The quick retreat pushed the price below the earlier low from the day (and low from yesterday) and the 61.8% retracement at the 1654.24 area. This will now be eyed as a topside resistance area.
Looking at the 5 minute chart, the 38.2%-50% retracement of the move down comes in at the 1653.29-1654.92 (this brackets the 61.8 retracement at the 1654.24 increasing the importance intraday). Staying below this level is a signal to me that the sellers are happy to sell more. It also should pressure any longs who may be buying dips.
Finally, the daily chart is also pointing for a potential further move lower. The 100 and 200 day MA along with the price converged at the $1687 level yesterday. This is a condition I call “Three’s a Crowd” and is a signal to me that the market is in equilibrium. When an market is in balance I look for imbalance and a trend. The break lower yesterday and continuation today points toward further downside momentum – as long as the price stays below those two moving averages (it would be more bearish staying below the 1654.92 area). The low for March comes in at 1627.89. This is a target. Below that the upward sloping trend line from the 2008 low (broken for a day in December but failed – will keep the old line as support) comes in at the $1615 area. Breaks of these levels opens up the downside for further selling.
