Evening traders,

Gold looks like it will be on the move again shortly.

Since my last update a couple of weeks ago the trend is still up, as can be seen in the chart below.  It has stayed above the VI and the Stochastic False Bar at the upper level indicates strength to the upside.

However, it has still to penetrate the recent resistance with price being squeezed into a triangle formation. This level could prove decisive with price making a clean breakout or reversing and heading down. Members of the Dynamic Trader trading room should be able to distinguis what action will need to be taken.

Advanced Get chart and data courtesy of eSignal.

Anne Chapman

Good morning Gold traders,

With the turmoil in the markets, Gold is still being traded by many as a currency hedge rather than as a commodity. Last week it moved into a breather zone and I recommended traders stay out of the market until a more decisive move occured.  This area of previous resistance acted as support at this level of 1160 and price perhaps is back on it’s way up if it can find some strength. However, if price breaks below the current support zone then it could well visit the next area based around 1120. If the current pattern is a bearish flag then 1120 is likely. If the pattern is a V shape bottom then sights will be set for the two leg extension to be tagged or even broken. Trading Room members should know which option to take and when.

Trading Room members will also notice a trade signal has occured recently.  This is a good but also an agressive entry point as there are areas of concern for price to clear. In addition, the two leg extension mentioned in my previous posts should be a factor to consider. Conservative traders will want to wait and see if price clears these obstacles before taking any action. Aggressive traders have probably already placed the appropriate trade.

Chart courtesy of Advanced Get.
Data provided by eSignal.

Anne Chapman

Good morning all,

After a lovely day out with friends in London I returned yesterday to see the markets had quite a tempestuous day.  Gold has dropped down to the Breather Zone, shaded blue on the chart and as discussed in my last updates, suggesting a period of consolidation before either a brief pullback with price reversaling back up or further movement to the down side.

RSI shows price has been overbought (shaded red) which could add to our recent confluence of events justifying the recent fall.

If price moves up out of the Breather Zone beware of resistance at both the recent highs and the two leg extension.  Profits could be quite limited taking this option, so it would be better to wait for price to clear the two leg extension before considering a long position.

If price move downward from the Breather Zone there are also a couple of areas of support: at 1160 and from the trendline extended from the H&S chart pattern formation. So, again, I would stand aside from taking a short on Gold.

We can see now that since December 2009 there has been a period of consolidation as the markets try to decide the true value of Gold.   We shall have to wait a little longer to see what the consenus will be.  But don’t take your eyes off the chart for too long as when Gold finally makes its move, it could be a big one!

Chart courtesy of Advanced Get.
Data provided by eSignal.

Anne Chapman

Good morning Goldbugs,

A few days ago my Gold update mentioned the limited advantages of going long at the moment.  Since then we can see that RSI has been overbought and a slight Pop & Drop has occurred, bringing price back down to below the December high.

If price continues to pull back and reaches the Fib breather level (shown by the dark pink zone on the chart) we would like to see a bounce and break back up to retest both the December and most recent high.

However, be aware that the Two Leg Extension is still in play so it would be safest to wait for price to clear this level of resistance before considering a buy. A break above the Two Leg Extension could provide more upside on this commodity.

Chart courtesy of Advanced Get.
Data provided by eSignal.

Anne Chapman.