TechnoMeter

After penetrating the zone of resistance that had developed last summer from $1,350-$1,375, short-term bearish price action has begun to show. Even with North Korea conducting another missile test and while the U.S. Dollar remained relatively bearish against most currencies, sellers controlled short-term price action in Gold, driving prices down to a key support zone.



If we take the major move of last year’s high down the December, pre-rate hike low; the 76.4% retracement comes in at $1,315.60 while the 78.6% retracement is at $1,321.15. This creates a zone that’s, at least so far, held the lows during this retracement. We’re looking at this zone in the below chart, demarcated in blue.



The fact that Gold prices haven’t put in a more vigorous response to this support zone combined with the fact that bulls failed to take over after another North Korean missile flew over Japan, it would appear that more weakness is on the horizon for Gold prices. This can lead to a deeper retracement in Gold prices, and below we’re looking at three support zones of interest below the current area. This could be looked at as potential take-off points for the longer-term bullish theme, with the expectation that an eventual re-test of $1,375 will be in the cards; while these levels can also function as short-side targets for those looking to take on bearish exposure to Gold. If Gold prices slip below the $1,275 level, then the confluent zone around $1,250 becomes attractive for short-side profit targets.

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