Possible scenarios were laid out back on March 8
a-) containment between the (newly modified) balance area $1586-$1560
b-) Buyers maintain the pressure into $1586 (not a mere “test”, that is). Then, I will be looking into $1592-$1590, followed by $1596, which will bring it closer to the $1600 mark. Above, I will be keying into $1603.
c-) Alternatively, sellers keep control of the situation. In this event, $ 1567 is an important price point, followed by $1560. I´m working here with the idea that the recent test/break of balance into $1560 is a clue of eventual (further) downside.
“b” scenario developed quite accurately to what I was expecting:
– 7-day balance area contained was broken by an important move (vertical development)
– $1586 was busted (not merely tested)
– development stopped a tad above the projected value of $1596 (actually, $1597.7 was the HOD), at least for now. If you take a closer look, you´ll see that price action respect almost to the tick the areas (previously) marked.-
I tend to put a lot of attention in this type of price action, as noted previously on several posts.-
It is important to be able to have the flexibility to raesses (even within the previosuly noted alternatives) and set forth new scnearios in order to be able to identify viable options regarding the price discovery process.-
In that sense, I´ll be working with the following alternatives:
b.1) Buyers keep control of the situation and seek to bring price into higher value areas (clusters) – $1600 is particular appealing rounded number, which is right in the middle of the bigger area contained between $1601-$1599 – Specifically, I´m keying $1603, followed by $1608-$1610 & $1611-$1612.
Above, $1615, $1618 & $1620 are the levels I´ll be paying attention to.
b.2) I will tend to favor more upside, unless I see a reactive an intense response by part of sellers. In that event, I will be looking at $1586, which happens to be the top of the balance area developed during last week. If sellers decide to act, we could be in presence of an analogue move to what we had back on Friday (after NFP), but in a different direction.
I will be watching $1579, $1576.5 & $1572, followed by $1567.5 & $1562
b.3) consolidation within the current area. Preferably, I would like to see it contained within $1590, but it can go as low as $1586 . – Sustained selling pressure into this limit, will likely bring back gold towards “b.2” scenario.