FX.co ★ Technical analysis of gold for October 7, 2016

Gold price remains in a downward trend and has reached important medium-term support at $1,250 and from current levels I expect a bounce. The reason will most probably be the NFP numbers announced later today.

Blue lines - bearish channel

Gold price is in a bearish trend, has broken below the 61.8% Fibonacci retracement, oscillators are diverging at oversold levels and price is approaching the 78.6% Fibonacci level of the rise from $1,200. As can be seen in the chart below, price is also at the 38% Fibonacci retracement of the bigger rise off the $1,045 lows.

The 38% Fibonacci retracement is important support and around this price level a bounce towards $1,300 is expected. Bears should better protect their profits with trailing stops as this sharp decline will most probably be followed by a sharp bounce. The bounce is expected to reach $1,300-$1,320. Will the NFP provide the causation?Possibly. My longer-term outlook remains intact. I believe Gold around $1,170-$1,100 will be a gift for bulls.