End of Week Report 26 Oct

Gold Weekly Recap
Recently, Gold managed to take out the 1214 resistance which now forms the first support of the new range. Last week saw a declining range which was forming a pennant. This week, Gold managed to push through the triangle formation that makes the pennant, to begin a potential second up-leg. Under normal circumstances, expectations could have been for further gains than occurred. The problem appears to be the 38.2 Fibonacci Retracement of the sell-off seen since April. This comes in at 1238 and, although there have been two prints this week at 1239, it has fallen back on both occasions.

Gold the Week Ahead
Although the longer-term picture still favours the Bulls, this 1238 Fibonacci level should not be underestimated however, if Gold manages to close above this point today, this would be encouraging going into next week, but two decent upper shadows where Gold previously pulled back from this area, suggests this may be difficult. There is potential for some end-of-week profit-taking. If this happens then the first support of note would be the bottom line from the recently breached triangle. This comes in at 1221 but, even if this does not hold, Gold remains positive if it remains above 1214.

Currencies
Last Friday's report suggested that GBP was looking technically weak and there has since been some heavy selling, even breaching the first target at 1.2921. It is currently sitting above another important support at 1.2785. EUR has also been gaining in strength against GBP as it continues the third leg of an ABC correction after a prolonged five-wave Elliot sell-off. Interestingly is that yesterday it closed above the 38.2 retracement of this Bearish Elliot Wave which came in at .8866. This is seen by analysts as more than a bounce and leaves potential for further gains next week. If this happens, then the next big target comes in at .8911 which was a strong resistance area back at September month-end into the beginning of October.

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