Gold Down-leg Completed
Commodities / Gold and Silver 2012 May 12, 2012 - 03:39 AM GMTBy: Mike_Paulenoff
Spot gold plunged to a new reaction low at $1573.01 in overnight trading, but has since rebounded to $1582/83. On further inspection, let's notice that the overnight new low hit and reversed off of the lower "support" line of the March-May down-slanted channel ... amidst a glaring 4-hour RSI momentum divergence.
My pattern and momentum work indicate that the down-leg from the May 1 high at $1672.10 to today's low at $1573.01 has the right look of completion (notwithstanding the likelihood of a retest or even a press to a marginal lower low).
That said, to confirm that a significant near-term low has been established in gold and the SPDR Gold Shares (GLD), spot gold must hurdle and sustain above $1602 and preferably above $1609.
Inability to do so will leave the price structure vulnerable to additional weakness that projects next into the $1560/55 target zone.
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By Mike Paulenoff
Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.
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