Gold is back below the 100 day MA (blue line in the chart above) at the 1608.67 level. The price has remained above this MA level on a closing basis since August 7th. The move higher from that date, tested the 38.2% of the move down from the end of February high (at 1627.54) but was not able to extend above this retracement level. This helped contribute to the fall today. A close below the 100 day MA will help swing the bias further to the downside as the precious metal consolidates the 3 month range. Although the price fell nicely on the break of the 100 day MA at 1608.50 area, the price has retraced nearly 50% of the days trend leg down today (see hourly chart below). That level comes in at the 1602.64. Just above that level is the low from last Wednesday at the 1603.18. Stay below this area on the correction, and the bears remain in control. Move above and a test of the 100 day MA should be the next stop. It would be a touch disappointing if the market is not able to keep the downside momentum going today. Overall, the market consolidates. There is trend line support below with higher lows – see daily chart – and resistance above with lower highs and also 38.2% retracement resistance. In between is the 100 day MA. At some point, the price will break either to the upside or the downside. Today with the price breaching below the 100 day MA, the bearish side is the preferred bias. However, that bias can trun around as traders get used to buying low and selling high. So be flexible in your approach and look to sell/buy at the extremes with defined and limited risk. Then follow the technical clues and hope for the market to agree.

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