BullMarketRun - Gold Update: Plenty Of Support OnBullMarketRun - Gold Update: Plenty Of Support On The Downside
July 19, 2010
Gold’s 30-day moving average is now in decline, justthe fourth time that has occurred in the past year-and-a-half. Thatsuggests some further minor weakness or chopiness is probable but thelong-term uptrend remains intact as John explains in more detail belowwith an updated chart and analysis:
Gold hassolid support levels between $1,140 and $1,180 which should be strongenough to enable it to make a reversal between the parameters.
John: The price of Gold (continuouscontract) continued to wallow today in the midst of the summerdoldrums, the seasonal period when both bullion and precious metalstocks battle weak markets and the spectre of reduced buying. Goldopened at $1,193, climbed to $1,195 and then drifted to a low of $1,177before climbing to $1,183 near the close.
Looking at the daily chart we see that for the past 9 trading daysGold has fluctuated within a horizontal trend channel (2 blackhorizontal lines) and today it broke to the downside and closed at thesupport band (former resistance) between $1,160 and $1,180 (greenhorizontal lines). Another support (former resistance) line (greenhorizontal line) is shown at $1,140 – this is a strong support levelgoing back to January of this year.
The sloping blue line is a trendline that should be watchedcarefully. When a turnaround comes, the price of Goldwill break this line to the upside indicating that a reversal hasoccurred.
Looking at the indicators:
The RSI(2) is quite low in the oversold region at 8% but can fallfurther before reaching an extreme level of <2. The horizontalorange line represents the approximate level of previous lows at pointsindicated by vertical blue lines. This shows we can expect furtherweakness – bearish.
The Slow Stochastics %K (black line) has crossed down over the %D(red line) and is in the oversold region – bearish.
The ADX trend strength indicator has the -DI (red line) above the +DI(green line) and pointing up. The ADX trend strength indicator ADX(black line) is now also pointing up, indicating that the downtrend isgetting stronger. Watch for the -DI to climb higher and peak possiblyaround the 35-40 level – bearish.
Outlook: The immediate outlook is bearish. Thereare very solid support levels between $1,140 and $1,180 which should bestrong enough to enable Gold to make a reversal betweenthe parameters. The breaking of the blue trend line to the upsideshould give the first sign of a turnaround or at least a consolidation.Longer-term outlook remains bullish.
Source:
https://www.bullmarketrun.com/2010/07/19/gold-update-plenty-of-support-on-the-downside/
Guy