GOLD Analysis - Price Correction

It’s my view that the strong up-move that began in mid-November, 2008, was actually part of a larger corrective formation. In fact all of the movement of Gold since then, both up and down, has been corrective in nature.

If that is the case, in not too many weeks we should begin to see a decline in gold value below the recent low set on April 17th at 864.50.

Meanwhile, however, the market is rising. The first upside target is the top of the rising channel which is currently around 936. A further rise to around 950 is a real possibility. These areas should exert significant resistance. If and when the market reaches there we should pay careful attention to the market reaction, whether positive or negative.


Daily Gold chart as at 7 May 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
NextView RSI – rising
Stochastic – rising
Li’s Sandwich – the outer bands indicate possible levels of support and resistance.
Channel – the channel creates a natural first target for the rise in gold’s value.
R1 – nearby, relatively weak resistance, at 918.50
R2 – 935.
R3 – 951.
S1 – 880.50
S2 – 864.50

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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.