Gold Signal Update

We noted yesterday that a bearish RSI divergence was developing on the 4 hour and hourly charts, suggesting a decline in gold in the short term and today we have seen that unfold.  The trading volume in gold has not been impressive on this strong rally and ETF redemptions continue apace - there is still much suspicion that this rally is merely a head fake designed to sucker in new longs before options expiry.

Gold is currently trading around 1334 after drifting lower all day and the bearish RSI divergence suggests further downside.  We need to see gold fall back into the down trend channel, currently at 1330 and from there drop below the key 1322 level again.

If this happens, the breakout will clearly be seen as a "fake out" and selling should accelerate back towards 1300.  A break below 1300 should see a return to the low 1200s as the bulls would be bitterly disappointed that the breakout attempt had failed.

However, the bulls have some momentum on their side and if prices continue to trade above 1330 for the rest of the week a break of 1350 would look more likely.  The dollar is trading around 82 and we expect (and need) the dollar rally to resume imminently - this would pressure gold and see the price fall back into the down trend channel.

==============================================
GOLD CURRENT TRADE 
==============================================
SHORT 
Oct Gold At 1337.50
  Stop 1363.50 On July 22/2013
==============================================

 

YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS 
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED. 

 Do your own due diligence. 

No one knows tomorrow's price or circumstance. 
 I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader. 
I do not accept responsibility for being incorrect in my speculations on market trend. 

 King Regards