My Personal Intuition:
It looks like gold has run out of steam to head to the next fibonacci extension level at 2.618, and is now hovering at 1.618. I believe if the covid-19 situation continues to improve, and markets become less risk-averse, we could be heading back down to the long term support level at 1.000, which is $1738.
Regarding the Fibonacci Extension Tool:
The level the price stops at will vary depending on the strength of the trend. Most often we see the price pause or reverse at 0.618 (weaker trend), 1.000 (solid trend), or 1.618 (strong trend). Once the reversal occurs we can then draw another Fibonacci extension, but we will keep the old one(s) on the chart as well, since down the road there are additional levels which can still be used such as the 2.000, 2.382, 2.618 and 3.000.
Using Traders Logic:
If we go by trading-logic, then we should trade with the trend, and go long on gold at this level. Shorting an up-trend is probabilistically a very bad idea.If gold heads up from 1.618, then we'd look at the higher levels of 2.000, 2.382, 2.618 and 3.000, which would indicate an extremely strong trend for gold.
Risk Warning:
P.S, this is the first time I'm applying Fibonacci Levels to XAUUSD, so take my analysis with a grain of salt. I discovered after reviewing my past trades that the following TA strategies are reliable, so I will endeavour to use them more for future analysis.
What Works:
1) Wedges, Triangles (break-up/down, violently)
2) Channels (break-up/down, violently)
3) Fibonacci Levels (pivot points, support/resistance)
What Doesn't Work:
1) Repeating Patterns / Fractals (you’re just seeing clouds)
2) Elliot Wave (gosh this is so hard)
3) Moon & 3 Cats (challenging to tell which scale-order the fractal exists)
It looks like gold has run out of steam to head to the next fibonacci extension level at 2.618, and is now hovering at 1.618. I believe if the covid-19 situation continues to improve, and markets become less risk-averse, we could be heading back down to the long term support level at 1.000, which is $1738.
Regarding the Fibonacci Extension Tool:
The level the price stops at will vary depending on the strength of the trend. Most often we see the price pause or reverse at 0.618 (weaker trend), 1.000 (solid trend), or 1.618 (strong trend). Once the reversal occurs we can then draw another Fibonacci extension, but we will keep the old one(s) on the chart as well, since down the road there are additional levels which can still be used such as the 2.000, 2.382, 2.618 and 3.000.
Using Traders Logic:
If we go by trading-logic, then we should trade with the trend, and go long on gold at this level. Shorting an up-trend is probabilistically a very bad idea.If gold heads up from 1.618, then we'd look at the higher levels of 2.000, 2.382, 2.618 and 3.000, which would indicate an extremely strong trend for gold.
Risk Warning:
P.S, this is the first time I'm applying Fibonacci Levels to XAUUSD, so take my analysis with a grain of salt. I discovered after reviewing my past trades that the following TA strategies are reliable, so I will endeavour to use them more for future analysis.
What Works:
1) Wedges, Triangles (break-up/down, violently)
2) Channels (break-up/down, violently)
3) Fibonacci Levels (pivot points, support/resistance)
What Doesn't Work:
1) Repeating Patterns / Fractals (you’re just seeing clouds)
2) Elliot Wave (gosh this is so hard)
3) Moon & 3 Cats (challenging to tell which scale-order the fractal exists)