WorldWideMarkets Community

Forex Trading, Market News & Technical Analysis

Today’s Trading Edge: Gold rallies above $1,300 and forms bearish butterfly pattern

Posted by WorldWideMarkets . on May 2, 2016 7:31:34 PM


Gold prices rallied in New York as expectations grow that the Federal Reserve will maintain a low interest environment and the idea of a June rate hike is fading.  Today, the US April Final Markit Manufacturing PMI reading printed a 50.8 reading, in-line with expectations, but still the lowest reading since September 2009.      

Price action on the gold daily chart shows that the recent rally stemmed a bullish Gartley pattern.  Point D was targeted with the 78.6% Fibonacci retracement level of the X to A leg and the 141.4% Fibonacci expansion level of the B to C move.  The bullish leg tentatively rallied above the $1,300 level and has tentatively formed a bearish butterfly pattern.  Point D is targeted with the 127.2% Fibonacci expansion level of the X to A leg and the 200.0% Fibonacci expansion level of the B to C move.  If valid, we could see price reverse towards the $1,275 level.  If the pattern is invalidated, major resistance will come from the $1,325 level. 

If we see a major bounce back for the US dollar, gold prices may drop even further and find key support from the $1,245 zone. 

The trade: Sell Gold at $1,305 with a stop loss at $1,315 and a take profit at $1,275. The Risk/Reward Ratio is 1:3

Topics: commodities, Fed, gold, $GLD, Federal Reserve monetary policy


Tools & Educational Resources

Forex 101LEARN MORE >>
Learn the basics of Forex and how to practice trading the markets.

GlossaryLEARN MORE >>
Confused by the language? Click here and search for key trading terms.

Browse our frequently asked questions and find your answers right away.

Access to the educational lessons, webinars and platform walkthroughs.


Get started with a FREE $10,000 Demo Account and experience the Forex Market RISK FREE!