Wednesday, 25 January 2012

Gold...This ($1653) is an important level and we are going lower

It became apparent this morning that we were seeing more than usual activity in the gold market. Price seems very tired and laboured and the effort to touch 1670$ was the tipping point. We fell to the CL of the green fork (P0 1560.06 on 15/Dec2011, P1 1641 21/Dec 2011 and P2 1522.55 on 29Th Dec 2011). Price shows us that it is weak in many ways. A Schiff fork drawn off the pivots along the line was a failure then we see that the energy from the line caused price to bounce but the upwards limit was defined by overhead resistance from the down sloping reaction line you can clearly see.Timne and time over price made wild spikes higher ( just as we have seen in the EURUSD at the recent highs above 1.30) and these sharp moves ( in the 1 min charts) can only mean one thing...Price gathers energy like a coiled spring to push down through the line. I counted 9 cycles before we broke lower and now we are at 1650$.
Will we go lower? I believe so and it is ironic that the last few days we have seen the usual analysts on CNBC/NBlomberg and other newswires all telling us what a safe bet Gold is now it has its familiar steady climbing habit of sucessive days with higher highs and closes etc. There is support at 1649 seen clearly on my chart form a reaction line with two more underneath.A break lower here would mean a return to the low 1600's. Also look at the Ensign template for the futures in a daily chart...the short term stochastic ribbons look ready for a tumble. I am not saying that Gold is finished as it surprised me with the endurance it showed int he recent price rise but we are definately overdone and as yet have seen no retacement or lower low. 1621$ would bring us to the LMLP of the green fork seen above and a .382 Fib RT and that would be a good start.

Heres the 240 min again showing the last few weeks action and look at the 2 x as well as the falling B-line

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