FX.co ★ Trading plan for Gold on May 16, 2022

Technical outlook:

Gold prices dropped through fresh swing lows around $1,786 on Monday before pulling back. The yellow metal is now seen to be trading at around the $1,805-07 zone with an eye on $1,817 in the near term. Bulls are now looking to come back in control and would be keen to hold prices above $1,786.

Gold prices hit the Fibonacci 0.618 extension of the earlier drop between $1,998 and $1,895 around $1,791 as plotted on the chart here. Ideally, the metal should produce a counter-trend rally towards the $1,890-1,900 zone in the next several trading sessions. Immediate short-term resistance is seen through $1,817, followed by $1,858 and higher; while interim support is now at $1,786 respectively.

Gold has carved a meaningful downswing between $1,998 and $1,786 now. The Fibonacci 0.618 retracement of the above drop is seen through $1,920 levels as presented on the 4H chart here. The high probability remains for a turn lower if prices manage to reach there. Most traders are now preparing for a potential corrective wave toward $1,920.

Trading plan:

Potential rally through $1,920 against $1,786

Good luck!