EXPECT PRICE OF GOLD TO RISE OR MOVE SIDEWAYS AT LEAST A COUPLE MORE DAYS...

Last week gold was sitting directly on a three week old trend line (not very strong). Since then the market has broken below that trend line but, as mentioned in last week’s analysis, the break of the trend line in this case is not a major signal to short, as long as nearby support at 831 holds.

The 831 level has been tested but at time of writing it is still holding and the market is moving upwards.

The trend line that was broken is now being tested by the market. A firm break above this level and especially above 888., will target the October high around 931. A drop below S1 will target 800 (around the lower rising trend line, as the first target, and around 740 as the next potential target.


Daily Gold chart as at 8 January 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

MACD – dropping.
Stochastic – below it’s 40 leave and currently showing some loss of downside momentum.

Despite the fact that 2 major indicators have turned down, I expect at least a couple of days of rising or sideways price action.

R1 – resistance at 890.50
R2 – 931
S1 – support at 831
S2 – 740.

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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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