Thursday, 26 January 2012

Gold...OK it looks strong enough to get to 1770$ & soon!

...Thats enough for me. After yesterdays posting whiel price was at the crucial level of $ 1650 we saw classic price rejection of lower levels. It has intersted me so much that i reproduce some of the the charts here again in the light that I learn something from it as I was considering a short on a break below the reaction line at $1648 as it turned out I did not trade Gold as I am 'margined out' on other positions ( + Corn) but I was shocked to see such a strong market and have looked at a possible entry. In the chart below/above we see price had sold off from 1670$ in the European/London session and quite sharply. We hit the green ML and then cycled sideways and price was giving all the signs of going lower. After 5 trys - each time being supported by the green line and resisted above by the reaction line we basically made a pennant/flag pattern ( in the 1 & 5 min TF) and broke lower. The reaction line and the big psycho 1650$ level was being tested at the very moment i was writing the post. What happened next took me by surprise (as the Fed news hit). We spent a few seconds at 1648.50 and then bar by bar we rose immediately above 1650 then above the green CL to 1655 and then a retouch on the green CL then a 'poke' bar which took out the previous high an then another long range bar. I think the second bar ( highlighted) at 1657$ should have been an entry. But there no point looking back....Where is gold going? The daily chart shows us that 1775-1785 is where the current Andrews fork objective lies and this usually proves to be a good yardstick of trend moves and this ccan be seen in the top left hand small chart...however if you use the 20th October low of 1608.40 as P0 (instead of 1626 on 26th Sept) then you get a simple Andrews fork that has a centre line time/price target of 1764$....allmost where we are now. Sadly I would not consider a long until after a pullback but this market has refused to do so since we touched this target a few weeks ago. So with Gold i will watch and see.

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