Price of Gold is still holding up

During the last five trading days of 2008, Gold was on a slow rise to test the December 17th high of 882.50. The market exceeded that level by US$8.00, indicated uncertainty, and fell back to the current value of 866.

There are several technical reasons which contributed to stopping the up move, at least temporarily. I’ll mention three of them:
1) The down sloping trend line continued to exert supply ( bearish force) on the market.
2) The top at 890.50 is precisely at a confluence of several significant Fibonacci ratios.
3) There was a gap up from Friday’s close to Monday’s open. Often market participants are intolerant of a gap and move to close it.

The market has now closed the gap and is currently sitting at a three week old rising trend line. A break of the trend line may provide short term traders with a shorting opportunity, but longer term moves may not come into play on the downside if support at 831 (S1) is not broken. If S1 is broken, the next support target is around 800.

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Daily Gold chart as at 31 December 2008 using NextVIEW Advisor. Click on chart for larger view.

If the market rebounds strongly from S1 support, the next upside target will be 931.

TECHNICALS
Trend Lines – the rising and declining trend lines indicate various levels of potential resistance and support in the market.
Stochastic – dropping from its’ over bought level.
NextView RSI – dropping but still in positive territory.

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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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20EMA – short term moving average, rising.