Will Gold Hold This Confluence of Support?
When different technical analysis tools all coalesce on one particular price level, this is what we call a “confluence of support.” Connie Brown (whose book Technical Analysis for the Trading Professional has a place of honor on our Recommended Reading List) stressed the value of using different technical indicators based on different inputs. When these indicators agree on a particular signal or level, that’s should be a higher conviction signal to consider.
In today’s video, we’ll show how the chart of gold (GLD) is testing a key support zone using three different technical indicators: moving averages, classic support and resistance levels, and Fibonacci Retracements. As the broader market averages continue in a risk-off mode in August, will gold find its footing and finally serve as a safe haven for investors?
- * What can we expect the GLD tests the first Fibonacci retracement level, and what a break lower here mean for the larger trend for gold?
- * Why is upward-sloping moving average such an important feature of bullish chart structures, and how important is the 200-day moving average in August 2023?
- * How do the momentum characteristics for gold relate to previous market cycles, and what would confirm a bullish rotation here?
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David Keller, CMT is Chief Market Strategist at StockCharts.com, where he helps investors minimize behavioral biases through technical analysis. He is also President and Chief Strategist at Sierra Alpha Research LLC, a boutique investment research firm focused on managing risk through market awareness. He is a Past President of the Chartered Market Technician (CMT) Association and currently serves on the CMT Curriculum and Test Committee. David was formerly a Managing Director of Research at Fidelity Investments in Boston as well as a technical analysis specialist for Bloomberg in New York. You can follow his thinking at MarketMisbehavior.com, where he explores the relationship between behavioral psychology and the financial markets.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.