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Gold Moves to Correct after Plunging to Major Support


April 18, 2013 – Gold (daily chart) has stabilized above major support around the 1315 price region after having plummeted early in the week to hit a low around 1321, establishing more than a two-year low for the precious metal. This dramatic decline continues the general bearish bias that has been in place since price turned down after hitting a high near 1800 resistance in October 2012. The most recent major bearish event occurred late last week when price broke down swiftly below key prior support around the 1530 area, following through early this week to hit Tuesday’s long-term low.

After establishing that low, price has rebounded and stabilized, with further room for potential upside correction after the plunge. Though the overall directional bias remains to the downside, key upside levels in the event of further correction reside around 1425 (also the 38.2% Fibonacci retracement of the swift decline) and 1475, with major resistance residing around the noted 1530 prior support. A continuation of the bearish trend would be indicated on a breakdown below 1315 support, which would potentially seek a further downside objective around the 1260 support level.

James Chen, CMT
Chief Technical Strategist
City Index Group


Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.

James Chen

James Chen

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.