GOLD: Bullish Rally Stalled by Resistance

The gold rally stalled at previously identified resistance at the declining trend line. If the market can drop below nearby support, it should find stronger support in the range between 816.50 to 793-70.

On the other hand, a close above the trend line will bring the October 10/08 high into sight at 931.50. the next target beyond that is the August 15th high of 988.50.

A few more days of sideways trading is not out of the question.


Gold chart as at 24 December 2008 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

200 Day moving average – beginning to flatten out – is exerting some resistance on the market.
TL1 – Once the sideways correction is complete, the down sloping trend line should not be a major barrier to the rising price of gold.
TL2 – Also note the presence of the rising trend line which is in an area of relatively strong support. A close below this line may require us to adjust our outlook on gold from bullish to bearish.
R1- at the declining TL
R2 – (not shown) 931.50
200MA – immediately above current price.
MACD – strongly up, implying probable momentum to follow.
Bollinger Bands – price remains strong relative to the Bollinger Bands at this time.

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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.

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