Last week I displayed a chart - monthly of gold setting out the advance from financial crisis low – of about $700 to the 2011 price peak of about $1900 – then down to the current lows of about $1160 which worked out to be a Fibonacci retracement number of about 62%.
Fibonacci Retracements are ratios used to identify potential reversal levels. The most popular Fibonacci Retracements are 61.8% and 38.2%. Note that 38.2% is often rounded to 38% and 61.8 is rounded to 62%. While 50% was not a Fibonacci number it is a very important technical correction price target.
Today’s gold chart is a monthly of gold setting out the advance from the bear market lows of 1999 through 2001 – of about $250 to the 2011 price peak of about $1900 – then down to the current lows of about $1080 which generates a current retracement number of about 50%. A failure here could take gold down to $895 for a retracement of 62%. Look for the gold miners to confirm when the bottom is in.