The entire gold run this week pretty much happened over the course of an hour and that is a concern as far as the short term upside goes. The other factor is that the pattern is choppy and overlapping and that also is worrisome. The short term cycle is due to turn up for the next two weeks but its accuracy factor is only 70% because as you know there are no guarantees only odds. Support today is the 1575-1583 area where the purple line resides and down to the lines at around 1575.. IF we we’re to break below those lines then the potential of another sell off to the lower red channel lines will be in play at the 1555 area and the 1535 area. Resistance is the 1602-1610 area today and now also the 1595 area. Weekly resistance is the upper purple line at 1628. In summary, the trend is neutral and if we break below 1572-1575 then we can’t rule out lower price.
As the end of the February, gold is set to post a 100+ point monthly loss for the first time since May 2012.
The daily and weekly charts are again looking very weak and
We break 1580, being the 61.8% retracement of the rally from 1554 to 1620, a retest of 1554 looks to be on the cards.
However, the RSI is considerably higher than the previous test of this level, so if we can hold 1554 again, we would probably see a bullish RSI divergence on the daily chart which would be a great cue to go long. On the other hand, a break of 1554 would open up a test of major support at 1525.
Gold has now more than retraced the entire rally following Bernanke's testimony to Congress, confirming that move to be nothing more than a "knee jerk" response. We closed out our trade at 1591 for a small $3 profit and we re-entered the market at 1577.
On the upside, a breakout above 1620 would be a sure sign that the correction was over and we would be happy to take a long position there. Whilst equities continue to move higher, we can't see a sustainable rally in gold, though we are sure that we are near to a major bottom in gold and major top in equities.
We thought we had got it last week, it appears we aren't quite there yet, though when the next upleg starts the gains will be spectacular. On the other hand, a break of 1525 would potentially present the clearest shorting opportunity of the past 10 years in gold.
However, with RSI levels at historic lows and sentiment at a bearish extreme, along with negative real interest rates set to remain for years to come, we just can't see gold breaking down hard from here.
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GOLD CURRENT TRADE
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GOLD CURRENT TRADE
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Position: Long Apr Gold on 28/02/2013
Entry: 1577
Stop Loss: 1552
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.
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
