Above is the daily chart of Gold (XAU=). It is really one of the markets that we would have to pay attention on recently.
After a long surge to over 1,900, the gold price plunged hard in previous few days following the OT measurement.
In fact, when we looked back in late August, there was a MACD divergence. This divergence has already warned us about possibility that the crazy strong buying-force would come to an end and the price of gold would slump.
After the great drop to 1,534, I drew a fibonacci retracement using this level and the high at 1,920. We can see that there is strong resistant at 38.2% level and strong support at 23.6% level.
So this fibonacci retracement does work on letting us predict the levels. If 38.2% breaks, then 50% which is around 1,720 would be the next resistant.
On the other hand, if 23.6% breaks, then the previous low at 1,534 would be the next support.
If we check the stochastic slow, we can find that these few days it has shown a divergence too. The price of Gold dropped greatly but stochastic actually rose a bit. So this divergence might tell us that Gold would at least rebound, or even head to the previous high again. I would generally have a more bullish view on Gold.
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