Wednesday, January 11, 2012

A Gold Update

Gold has been on a wild ride the past month or so after collapsing below 1700 just days after I posted about the "The Gold Triangle" breaking down. The gold market built an impressive and impulsive rally up over 120 points since bottoming a few weeks back at 1525. Today we touched a high of 1648 before pulling back and closing a bit off the high. This area is important because the swing high from Dec 21 was 1643 and if gold can close above this level it will be on its way to attracting buyers up to 1680 next.

It is a bit overextended short term and could use a 1-2 day pullback and if this occurs it should hold the 1613 level of support which is now a 1 year VPOC where alot of business has been done as you can see the daily chart above. On the profile there is a little volume pocket up to about 1700 so buyers could drag it up to there easily.

The downtrend line from the Sept and Nov highs comes into play a little higher near the 1690-1700 zone and will definitely give gold a tough time if it gets there. Also the LRC channel has resistance in that area currently.

On the bullish side the TTM trend has been back to a buy signal for 6 days now and the DMI is crossing back into green buy mode. We are entering a more quiet time of year for metals as they historically consolidate into early Spring so this could result in a base being built between 1600 and 1700 in the coming weeks. All in all, it seems to me like downside in gold is limited and dips are buys as long as it holds above the 1613 zone of support.

1 comment:

Stan said...

Hi Jason,

Interesting and detailed analysis (found your blog through ZenTrader).

Hope you don't mind me posting a link to some other site, but it has some relevant (and somewhat similar ) analysis on GLD daily -

Maybe you could chime in?