Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Rallies back to Resistance at $700, Though COT Signals Potential Warnings

Commodities / Gold & Silver Apr 18, 2007 - 11:13 PM GMT

By: Clive_Maund

Commodities The gradual uptrend of the past 6 weeks has brought gold once again to a critical juncture. This rise has brought it up to the late February high and within $40 of last year's highs at about $730, raising hopes that it may soon break out to a new high.


As we can see on the 2-year chart the current situation is rather complex. In mid-January gold broke out from a 3-arc Fan Correction, marking the start of another uptrend and after rising for a while it reacted to successfully test support above the 3rd fanline of the correction. It has since risen again, slowly and steadily, to attain the level of the February high at and above which there is strong resistance, which in itself is grounds for caution.

The price has been shepherded higher since the October low by the trendline shown and the 300-day moving average, near which gold has found support throughout the bull market. On the face of it this is a bullish setup that should lead to an upside breakout and another strong uptrend. However, if we look now at the latest COT chart we can see that the warning bells are once again sounding loud and clear - the level of Commercial shorts increased substantially last week and is now at a relatively high level. So it looks like the price is going to fail again at the major resistance above $690 and turn tail and retreat, although this does not mean it has to break down below the important trendline in force from September 2005.

The most likely scenario therefore is that gold will go into retreat shortly back towards the trendline currently at about $645, and if so we will want to see the Commercials' short position moderate to prepare the ground for another challenge of the big resistance at and above $690.

If the uptrend is broken it will likely lead to a prolongation of the consolidation in force since May last year. The worst case scenario is that a double-top is forming with the highs of last year, but it would take a breakdown below the trendline to provide initial confirmation of that, and if that is followed by a break below the trailing 3rd fanline it would of course constitute a major sell signal.

We have been long up to this point, and without the deterioration revealed by the COT figures would have been prepared to wait to see if gold can break out above last year's highs. Traders long gold here should be aware of this short-term downside risk and profits should be taken in gold stocks that have run up sharply over the past 6 weeks. At this point we are looking for a reaction, but it is not expected to be too serious, and should be followed by another challenge of the strong resistance at and towards last year's highs.

By Clive Maund
CliveMaund.com

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.


© 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