A student asked today why gold prices significantly dropped during the U.S. session last night.
Last week, on the eve of the July 4th non-farm payrolls report, market analysis identified the key price level of 2368 for students. A 'key price level' represents the breakeven point for either bullish or bearish positions.
When the market breaks through a key price level, it indicates that it has reached the breakeven point for either bears or bulls. Without a profit margin, positions need to be closed.
From July 1 to July 5 this month, prices ranged from 2318 to 2392, marking an increase of 74 in the gold price, or 7400 points.
Considering last week's bullish trend, this week might require a correction. Given that gold's average monthly volatility is around 130 points, it is unlikely to surge continuously within a single week.
It is highly probable that gold will undergo a correction and consolidation this week to build momentum.
According to the teacher's trading logic analysis, using the Fibonacci retracement, a 50% correction would equate to 3700 points, implying a retracement to 2355 from 2392 (as shown in the illustration).
Yesterday's 2355 price range saw the downtrend halt. Today's market is expected to test the key price level of 2368, consolidating within the 2368 to 2355 range.
Keep an eye on the following key price levels for potential upward movement: 2368, 2380, and for potential downward movement: 2351, 2346.
