The yellow metal’s historic run continues with the tagging of new all-time highs, and a look at the Fibonacci extensions shows the next stop may be the key $1500 level.
Price action on gold (a daily chart of which is shown) as of Tuesday (Mar. 2) has broken out above its previous all-time high around $1430, which was just established in December, and hit a new all-time high tentatively above $1438.
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(Price on top pane, Slow Stochastics on bottom pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
This occurs within the short-term context of a steep, month-long uptrend and within the larger context of a remarkable long-term bullish trend that has respected a clear uptrend support line for several years.
In currently uncharted territory, further upside targets can be determined through the use of Fibonacci extensions, perhaps the most important of which is the 161.8% extension.
When the last major bearish run is measured from the previous all-time high around $1430 down to the most recent swing low around $1308, the 161.8% Fibonacci extension resides around the key $1500 price level, which now serves as the next major resistance target to the upside.
By James Chen, chief technical strategist, FXSolutions.com
