We have had the catalyst for a pause in the recent up move in the metals.
We posted a high last night at 1,195… just 5 bucks away from the round number 1,200. Important psychologically…What was astounding was the rapid rate of decline. Most of that was fueled, I believe, because it was a Holiday here in the US, and no one was working, ie trading these markets. That left them vulnerable to some short term fluctuations which would have been absorbed differently if there had been usual market depth.
In any event, I did a chart retracement for the Gold.
We had a near term low at 1026.90 on Oct 28th. Yesterday’s pop to 1,195 represented a 168 dollar rally from that low.
I ran the Fibonacci retracement, and low and be hold, we found support at the first retracement, 38% at 1,130.90… If the correction continues, we have support next at the 50% retracement of that 168 point move, which falls at 1,110.60.
The 62 % retracement is 1,091.10… These are all relatively far away, but the market moves uncannily towards them.
Last night’s trading saw 38 percent pullbacks from the recent rallies in both the DJZ, which found support last night 30 ticks below the 38% support at 10,147… the actual low last night was at 10,116.
In the Jan beans, the low last night was a 1021… 2 cents below the 38 percent retracement at 1023.
If you were reading my blog, last night, unlikely, I know, but if you had been, you would have had those support numbers about an hour to two hours before we traded down there.
Where they exact? No, but close enough to be good points to consider stepping in for a bounce. And that’s exactly what we have seen since then. Ditto in the Gold.