BONUS AVAILABLE FOR
BOTH NEW AND EXISTING CLIENTS
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 - 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 1683 for bullish & close below 1647 for bearish.
THE BIGGEST PROBLEM is the choppy and overlapping pattern. It looks like its barely holding. On the upside we are now below the green 200 hour moving average. All in all, the odds are switching to favor the downside if we break below the mini RED downtrend line at 1660 and close below it. ANYTHING is possible in this wedge but the risk to the downside outweighs the upside if we can’t close above 1675-1680. It looks like maximum resistance should be encountered at 1685.
If gold breaks the 1651-1654 area and knocks out 1647 it will favor the downside. Even closer, as long as we can’t get above 1675 gold remains poised to favor lower. The hourly chart shows two trend lines. One at 1665-1667 and one at 1658-1661. If they let go only 1651-1654 will have a chance to stop the downtrend. In summary, the choppy and overlapping pattern is not usually a bearish outcome and with the new short term cycle ready to begin the choice will favor the downside on any break of the channel lines we highlighted on the hourly chart.
Medium Term=Bullish - 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 1683 for bullish & close below 1647 for bearish.
Support and Resistance
(APRILGOLD – SUBTRACT TWO DOLLARS FOR APRIL GOLD)
Initial Resistance 1675-1685 and 2nd tier 1695-1701
Initial Support 1659.70-1667 and 2nd tier 1647-1654
The hourly chart
After four unsuccessful tests to stay above the red downtrend line from October and two price failures at the mini blue line near 1685, gold prices ended up getting resistance on Friday at the red downtrend line at 1674. To top it off Friday closed below the green 200 hour moving average at 1671. The most important lines here are the one we are on at the 1663-1667 area and then the red downtrend line at 1660-1661. For this line we give some penetration potential so 1654-1661 is very important support.THE BIGGEST PROBLEM is the choppy and overlapping pattern. It looks like its barely holding. On the upside we are now below the green 200 hour moving average. All in all, the odds are switching to favor the downside if we break below the mini RED downtrend line at 1660 and close below it. ANYTHING is possible in this wedge but the risk to the downside outweighs the upside if we can’t close above 1675-1680. It looks like maximum resistance should be encountered at 1685.
What Next?
Gold is stuck in a wedge between the 200 day average and the 50 day in the 1665-1685 area. Until we move out of this price range, things can go either way. The Chinese New Year is underway and so far nothing in gold. The window for the next short term trend to take hold closes on Wednesday and unless we invert it favors lower into the 24th of the month. It takes a close above 1682-1687 to favor the upside.If gold breaks the 1651-1654 area and knocks out 1647 it will favor the downside. Even closer, as long as we can’t get above 1675 gold remains poised to favor lower. The hourly chart shows two trend lines. One at 1665-1667 and one at 1658-1661. If they let go only 1651-1654 will have a chance to stop the downtrend. In summary, the choppy and overlapping pattern is not usually a bearish outcome and with the new short term cycle ready to begin the choice will favor the downside on any break of the channel lines we highlighted on the hourly chart.
Bottom Line
it will be surprising if this doesn’t end with some sort of high volume capitulation day. Once the breakout or breakdown takes place it should be hard and swift. Until then the swings inside this wedge can continue. Time is running out as the seasonal weaker part of gold is due to being soon. (See the weekly update for commentary). There are also charts on the weekly that show the USA monetary base and how close gold correlates to it. The base stopped increasing at the same time gold peaked. It has a slight blip up now but not enough to confirm a new trend. As long as the base is not expanding gold could very well remain under pressure. The wedge has gone under upside testing over the past weeks. With the new cycle beginning this week, odds favor the downside portion of the wedge is coming up to bat. If we break those channel lines mentioned above, then it will be the downside portion of the wedge to be tested. We also haven’t touched the 200 day average in the last few days. If we lose the 200 day odds will favor the downside. Closes below 1647 will warn of trouble. Even the medium term trend is not far away from moving out of bullish mode.
How real is the danger?
The chart below tells the tale. If we drop below this channel line from the 2008 low there will be a quick flush out. If it doesn’t recover within a day after the flush, and we break the January low, odds will favor a move to 1570 with the potential for more. It’s best to remain defensive and to prepare for the next two week cycle. There’s only a 30% chance that prices invert. That means a 70% potential that the next two weeks turns down. We need a close above 1685 to neutralize the downtrend. If we can’t get above 1675 on the next attempt (probably today) and we fail get the helmets ready.
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
