Get Ready To Rumble

Gold May 1 Daily bull/bear pivot range=1472-1476 (ideal 1476) Resist 1475-1485 & 1497-1504 Sup 1458-1466 & 1441-1450 is strong supp

GOLD continues to consolidate despite mixed signals from investors. Whilst the U.S. Mint reported that sales of gold coins are at a three year high after the recent price plunge, holdings in exchange traded products fell more than 170 metric tonnes last month. This equates to a 7.1% fall in holdings to the lowest levels since October 2011. Investors withdrew more than $10 billion form gold funds in the first quarter. On the other hand, central banks continue to buy gold with Russia and Kazakhstan increasing reserves for the six consecutive month in March. The World Gold Council estimates that central banks will buy as much as 550 tonnes this month after having increased their holdings by 534 tonnes last year.

Since gold has plummeted 17.5% dropping from $1600 down to $1320 per ounce with silver and gold stocks falling also they are now headline news once again. This move has caused some serious damage to the charts when looking at it from a technical analysis point of view. Below are some basic analysis points that show a new swing trading entry point.

The Technical Traders Chart Analysis

Broken Support – Once a support level has been broken it becomes resistance. Gold is trading under a major resistance level.

Momentum Bursts - Since the April 15^th low, gold has been setting up for another short selling entry point. Remember the market tends to move in bursts of three, seven or ten days then price reverses direction or pauses. It has now been 10 days.

Moving Average Resistance – Gold has worked its way up to the 20 day moving average which can act as resistance.

Bearish Inside Bars – This type of chart pattern points to lower prices. When there is a big down day followed by 3, 7 or 10 up days inside the price action of the down bar we can typically expect another sharp drop which tests the recent lows as shown with the arrow on the chart.

Gold Short Selling Conclusion

In short, gold is setting up for a low risk entry point that should allow us to profit from lower gold prices. Using an inverse ETF like DZZ or even the gold mining stock inverse ETF DUST could be played. These funds go up in value as the price of gold falls.

While I expect gold to pullback, I do not think it will make another leg lower. Instead, a test of the recent low or pierce of the low by a few bucks then reverse and start building a bullish basing pattern before going higher.

 

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