Direct from the desk of Dane Williams.
In my style of trading, we only want to be doing business around major support/resistance zones because that's where markets should be the most efficient. If everyone is watching a zone, then everyone is trading the zone and liquidity brings efficient price action.
After speaking about the recent Bitcoin price action on the blog yesterday, @buggedout left a comment on the topic that is worth talking about on a fresh post today.
Gold Blows Off Top
What we also saw overnight, was a pullback in Gold. A really juicy $2,000 pullback which in a suposeldly stable, risk-off market like Gold, just shouldn't happen.
But to me, it didn't shock me too much. This is because what I said yesterday on the blog about the Bitcoin price action, is exactly the same as what we're seeing here.
Take a look at where price is sitting on the Gold daily chart below.
XAU/USD Weekly:
You can see that there doesn't look to be any clear support/resistance zones between the last zone at 1748, and the 2000 psych level.
Gold has pulled back and there's no clear place for it to stop until it gets back to the 1748 zone.
So in dollar values, it looks like a massive move, whereas maybe it's not really.
You can also see on the Gold daily chart below that when you zoom in, there just wasn't a single pause between zones.
XAU/USD Daily:
If there was no pause to develop a higher time frame support/resistance zone, then there's nowhere that people are going to gather around to do their business most efficiently, leading to the crazy moves we see in Gold here.
Patience, young padawans. Patience.
Best of probabilities to you,
Dane.
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Is this a scenario where you might look at Fibonacci ratios? If there isn't readily established support in such a broad range it might find support around a key fib ratio.
I don't because it adds another level of subjectivity I don't want to deal with. But I can see just by looking at that gold pullback, it's somewhere near the 50% which is hard to argue with.
Whatever works!
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