Price of Gold in a corrective pattern

Gold spiked marginally higher to 673. on Wednesday of last week and then closed the day at 736.50, below it’s opening value. This is bearish action for the near term, with no long term implications.

As with most of the markets that we’re analyzing this week, gold in a corrective pattern. The formation is not confirmed but appears to be a symmetrical triangle. So far, price movement has been confined within the perimeters of the rising and declining trend lines.

The triangle is consistent with my view that gold is currently in a wave “B”, in Elliott Wave terms, and the break out from this formation will most likely be to the downside.


Gold chart as at 19 November 2008 using NextVIEW Advisor

TECHNICALS

The high of 778 and the low of 681.50 define the range of the correction. A close above the high would have bullish implications while a close below the low would have bearish implications.
Bias is to the downside.

If my view of a triangle pattern is valid, several more days of compressing price action is likely before a breakout from the formation can be expected.

R1 – 778.
R2 – 805.
S1 – 681.50
S2 – 656- 623 (not shown on the chart).

NextView RSI – flat, below it’s 50% level.

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.