Technical Analysis – Gold – Stronger but lacks momentum
Fri, 16 May - 9:47am
1310 Upper BB
1315.75 Recent resistance
1331.25 Recent peak
1375.65 Sept 19 peak
1388.70 March high
1434 Last summer’s high
1285.50 50% Fibo
1282 Recent support
1281.65 April 21 low
1280 Lower BB
1268.50 Recent dip low
1261 61.8% Fibo
1182.45 Dec low
1180 June low
1155 July 2010 low
Legend:Fibo = Fibonacci retracement line
DMA = Daily moving average
MACD = Moving average convergence divergence
H&S = Head-and-shoulder pattern
UTL = Uptrend line
BB = Bollinger band
Gold prices are stuck sideways – the market is vulnerable because this sideways pattern could be a bearish continuation pattern. That said, attempts to break lower have not seen follow-through selling.
We have generally expected dips to be well supported, which has been the case. The market now needs buyers to return.
(The latest Commitment of Traders Report from last week showed the net long gold position climbed 12,729 contracts, with 13,213 new longs – so there was some fresh buying around last week.)
The stochastics have crossed positively, which provides some support for a rally, but it will no doubt take a breakout to get momentum going.
We feel it will take a close above $1,316 to signal a breakout; such a move would also take prices above the upper BB, which is at $1,310.
The question now is whether gold is a sell while prices approach the top of the range or whether to get positioned for a breakout.
Overall, we feel gold is hammering out a base around $1,280. We feel the market is not exactly bearish for gold but neither is it particilarly bullish.
All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.
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