Into the potentially critical US payroll report window, April gold was $12 an ounce above this week's lows and $20 an ounce below this week's highs right at the 200 day moving average at 1663. On queue the employment report this morning sent gold flying back up to 1682. But then Gold in a wild flurry reversed and dropped 20 dollars to 1663 in a matter of five minutes---right back to the 200 day moving average.
In 90 minutes today gold moved from 1663 to 1673 to 1663 and now at 1670-1675. What is going on?
The demand/supply forces are coming to a head in what’s called a price wedge where the price range gets tighter and tighter as the countervailing forces come to a neutralization point. The uptrend and downtrend lines which are basically lines that measure the outer edges of the statistical distribution of prices are now coming to a conversion or crossing point where the market forces for a very short time find equilibrium. Because gold has become so important to the worlds financial debt crisis the demand has been in full tilt boogie over the past 11 years. But for 17 months now gold has been in a corrective manner and this wedge once price breaks above or below these trend lines it will most likely set the pace for February. Both buyers and sellers know this and thus a big battle for control ensues in a small price zone. That is why for the last 6 weeks there is only a 50 dollar range in closing price. Note how the 50 day moving average is where the top end of price takes place and how the 200 day average is beginning to now form near where the lows are taking place.
The bottom line is that we’re going to have to wait and see which side wins. While the fundamentals remain strong for gold, it has been in a corrective mode since October. This type of price action is actually typical when the set up for a new medium term trend gets ready to develop.
A weekly close above this trend line with two or three days above 1700 would favor a test of 1750-1800 in February. A weekly close below 1600 with two or three days below that price range would favor a test of 1500-1530 during February.
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
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.
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
