Gold Analysis - Technical Resistance may turn the market back down

Note the down-sloping parallel lines on the gold chart below. The lower channel line “almost” contained the movement of price as it corrected downwards in a six month long ABC correction.

In fact, the recent low of 791.90 was better contained by a confluence of several significant Fibonacci numbers. The market then moved up about 5% to 838.80 and is hovering in this general area as I write.

Resistance may turn the market back down for another test of the 790. region.

At any rate, the 790. area has powerful support. So momentarily, value is hesitating around the 840. resistance area. A fall back from this area will most likely create a trading zone between 790. and 840. If that is the case it will most likely be broken to the upside where it faces new resistance from 880. – 920.

TECHNICALS

The two year old rising trend line could be a down side target where strong support will emerge if the market corrects moves in that direction. A serious downside break of this trend line (not expected any time soon), would target support around 720.


Daily Gold price chart as at 28 August 2008 using NextVIEW Advisor

R1 – resistance around 840.
R2 – the second line of resistance around 880.
S1 – nearby support in a zone between 780.-800.
S2 – 720
MACD – turning up from its’ oversold area.

Commentary and analysis by Don Schellenberg