Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Corrective Downtrend Imminent End to Target New Highs

Commodities / Gold & Silver 2009 Jun 21, 2009 - 06:48 PM GMT

By: Clive_Maund

Commodities

Best Financial Markets Analysis ArticleGold broke down and went into decline, as predicted in the last update posted early this month. At that time our maximum downside target was the strong support in the $880 area, but now there are strong signs that the decline has either run its course, or is close to having done so, and that a breakout to new highs may be close at hand.


On the 6-month chart we can see how the double bearish engulfing pattern at the highs led to gold going into retreat as expected, within a tightly defined downtrend. Although price action shows little sign of the downtrend ending, we can observe several strongly bullish influences that could lead to its ending anytime soon. One is the proximity of the rising 50-day moving average, while another is the bullish alignment of both moving averages, the 50 and 200-day. In addition the price has dropped back into a zone of support, and finally short-term oscillators have neutralized as a result of the reaction, renewing upside potential. Although helpful inasmuch as it enables us to examine recent action in detail, the 6-month chart is useless when it comes to divining the major trend and determining gold's next big move. To do that we need to refer to longer-term charts.

The longer-term 3-year chart provides us with more of a roadmap showing where gold is relative to its major cycles, enabling us to figure where it is probably headed next. Superficially the pattern that appears on this chart looks like a major top area forming beneath the strong resistance approaching last year's highs, but if we look closer we can see that a bullish high level Head-and-Shoulders bottom has formed beneath the resistance which forms the neckline of the pattern. This formation is remarkably symmetrical and if the symmetry continues gold will complete the pattern shortly by blasting out of the top of it to new highs. If this interpretation is correct then clearly we at a good point here after the recent reaction to accumulate or build positions in gold and gold stocks.

While the dollar rebound of recent weeks was predicted in advance, which was a factor leading us to take profits in PM stocks at the start of the month on www.clivemaund.com, there has not been as much follow through by the dollar as we had expected, and now the dollar is looking increasingly vulnerable to another downleg that could be severe. On the 1-year chart for the dollar index we can see how it has temporarily stabilised above the support level shown, allowing its oversold condition to unwind, but it has, thus far at least, failed to make much headway and with the falling 50-day moving average coming into play and starting to pressure it from above, it is looking increasingly vulnerable to breaking lower again to commence another downleg. If the current small trading range is a bear Pennant, which is what it now looks like, then the downside target for the next downleg is the 72 area. It should be obvious that if such a move transpires, gold is likely to break out to new highs and will probably advance to the $1080 area, which could happen quickly.

Finally the huge upside volume in big silver stocks on Friday is a circumstantial factor that also suggests an imminent end to the downtrend in both silver and gold.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2009 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in