GOLD PRICE: RISK IS TO THE UPSIDE

The rise in the value of Gold halted sharply at 866.50, precisely at the convergence of three significant Fibonacci ratios.

The up-move that began on January 15th appears to be part of a larger correction which should resolve itself to the downside. A close below 836. will virtually confirm that the current uptrend is over and that a test of the January 15th low of 821.50 is underway.

If that occurs, a subsequent drop to around 770 will likely occur.

Risk is to the upside. A close above the down sloping trend line will target the January 9th high of 890.50


Daily Gold chart as at 22 January 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Stochastic – up
CCI – a momentum and volatility indicator, is above it’s 50 level, a bullish sign.
Price Pattern – the recent pattern appears to be a bearish flag, but this is not confirmed until 836 is exceeded to the downside.

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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.