Long Term=Bullish - major yearly resistance 1792-1804 needs to be exceeded on a monthly bass and close above 1840 to resume long term up bull trend.
Medium Term=Bullish/Neutral - It takes a weekly close below 1625 to turn the trend Neutral. Resistance 1755-1765(Oct/Nov 2012 Resistance)
Intermediate Term= Neutral---it takes a close below 1647 to go bearish & close above 1711 for bullish.
Short Term= neutral--- Need a close above 1675 for bullish & close below 1647 for bearish. We closed at 1648
(APRILGOLD – SUBTRACT TWO DOLLARS FOR APRIL GOLD)
Initial Resistance 1654-1661 and 2nd tier 1667-1672
Initial Support 1633-1643 and 2nd tier 1622-1626
The hourly chart
Once again the choppy and overlap pattern came home to roost. If you follow us on Twitter (@GoldTrends) we posted last night just before the drop “gold on the verge of turning down” but that wasn’t anything we didn’t discuss last night. All the bullish factors for gold are just not cutting it and now the situation is close to spreading to the medium term trend. If the medium term trend turns bearish, we’ll be putting more “short” trades on the signals page. We’ve avoided shorting the market because of the trend and we don’t recommend selling physical gold or medium term holdings yet. If the medium term trend turns bearish I’ll look to reduce little bits of some of mine and will let you know if and when I do.
As far as the hourly chart is concerned resistance should come in at the 1655-1661 and 1669-1674. Because of the chop and the WEDGE we can’t rule out a reverse right back up to these areas. Not only did the channel lines let go but by the looks of the selling on the bid that took place yesterday it’s likely that the FUNDS who follow the 200 day average unloaded when price took out the 200 day at 1664 and that added to the momentum. The key support area now is the gold line at 1633 on the chart and the Jan 4th low at 1626 spot and 1629 April gold. There’s also a GANN magnet number at 1622. Thus 1622-1632 is the next important support area on an intra-day basis and 1647 on a closing basis. If we get a probe down to1622-1632 it’s a consideration for a trade with a stop around 1615. A failure to hold that area will suggest prices will favor a move to1570. Tuesday favors a consolidation day in the 1640-1660 price range. Keep in mind the WEDGE does allow for wild swings so we can’t rule out a move to test resistance. Lastly, the President’s “state of the union” address is tomorrow night. The stock market has a tendency to move up and for gold to move down or at least contain the upside. That’s just historic price observations and each year doesn’t follow every time but still something to be aware of. In summary, with all the bullishness and the Chinese New Year festivities, gold continues to display very weak patterns. Bounces aside, the downtrend is still in play.
What Next?
Gold gave up the channel lines and the 200 day moving average. The only thing it did to not add maximum downside velocity was to close below 1647 and for it to hold that daily channel line on the cycle chart. The hourly shows the 1622-1633 area as support and the daily shows 1640-1647. Perhaps we get an intraday low at 1622-1633 and then a bounce back to close above the daily at 1647. That would cover the key channel lines on the hourly and daily chart and is a scenario where both charts could satisfy their channel line supports.
The trends remain down. Tuesday favors a consolidation day as that is what we usually get on a selloff day. We say usually because price is weak and it’s not out of the question to test the lines we discussed by Wednesday. The wedge and the pattern we’ve been in of chop gives some hope that a bounce will develop from the Tuesday am low at 1639 basis April gold. We’ll favor a range bound day on Tuesday of 1640-1660. Somewhere near that range plus or minus a few dollars. It’s best to remain defensive and be ready for anything in this WEDGE.
Bottom Line
We discussed losing the 200 day would favor lower and that is where the acceleration lower developed yesterday. We favored the downside portion of the wedge to be tested due to the cycle window we’re in and we got that. A close below 1647 would add to downside potential.
We’re inside the wedge still and that means we can turn right back up from this downside test. INTRADAY spikes don’t matter in a wedge it’s where we end up at the end of the day. The cycle window closes on Wednesday and the odds have a 30% potential to turn up and rally from here and 70% that we move lower. Any new low next week puts the downside into play until the 24th of the month. The trends remain down but wild are the swings inside the wedge.
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
