Gold surged higher in early trading yesterday, finding resistance at the 50 DMA at 1285 before reversing sharply and ending the day well down, forming a "shooting star" candlestick on the daily chart.
This reliable reversal pattern was confirmed with follow through selling this morning that has taken the price down as low as support at the 200 hour MA at 1263.
We expect the price to decline rapidly now that the top is in for the recent rally, with a break of 1240 the first target for the bears, who will fancy thier chances of testing 1180 this time. The 200 hour MA may provide some support though once that level breaks, 1240 should come around relatively quickly (gold always falls much harder and faster than it rises).
Support can be found at 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180. A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - this prospect now looks more likely and the break below 1250 gives us an indication of a likely eventual return to 1180.
Resistance can be found at 1277-1280, 1283, 1289, 1293-1296, 1304-1305, 1309, 1314-1315, 1319-1322, 1330-1332, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435. The failure to break above the 65 week MA suggests that the intermediate down trend remains in play.
This reliable reversal pattern was confirmed with follow through selling this morning that has taken the price down as low as support at the 200 hour MA at 1263.
We expect the price to decline rapidly now that the top is in for the recent rally, with a break of 1240 the first target for the bears, who will fancy thier chances of testing 1180 this time. The 200 hour MA may provide some support though once that level breaks, 1240 should come around relatively quickly (gold always falls much harder and faster than it rises).
Support can be found at 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180. A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - this prospect now looks more likely and the break below 1250 gives us an indication of a likely eventual return to 1180.
Resistance can be found at 1277-1280, 1283, 1289, 1293-1296, 1304-1305, 1309, 1314-1315, 1319-1322, 1330-1332, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435. The failure to break above the 65 week MA suggests that the intermediate down trend remains in play.