INTERMEDIATE TERM TREND: BEARISH/NEUTRAL
SHORT TERM TREND: BULLISH
VERY SHORT TERM TREND: NEUTRAL
Gold hit a new rally high of 1238 near the 100 DMA on Tuesday, forming a "double top" at that level yesterday. The price has since fallen back to retest the uptrend channel line at 1217 and there is a potential "three river evening star" candlestick pattern forming on the daily chart.
This would be a bearish development and suggest the recent rally was a short lived reaction to falling equity markets and that the intermediate bear market remains intact. However, a bounce from these levels and a close above 1220 on a weekly basis would suggest the rally still has more to go.
The equity markets are bouncing this morning after sharp falls due to Chinese markets tumbling and fears of a Greek exit form the Euro looming back into the foreground yet again. The fact that this bounce is coinciding with a fall in gold is troubling for the bulls and suggests that the bearish scenario above may be playing out.
The dollar rally shows no sign of slowing - with the Euro under pressure due to Greece and its internal problems, the Japanese Yen cratering due to the massive QE expansion programme and the British Pound suffering form proximity to Europe, the dollar is the only show in town.
Support can be found at 1217, 1208, 1200, 1191, 1186, 1180-1183, 1175-1178, 1154, 1145-1147, 1131, 1124, 1100, 1085, 1045 and 1000 . Although the break of 1180 has serious bearish implications for gold and suggests a decline to 1000-1050 in the short term, gold has bounced back and appears to be building a base to move higher.
Resistance can be found at 1222, 1235-1238, 1250, 1255, 1263, 1271-1273, 1290-1292, 1300-1302, 1310-1312, 1322-1325, 1333-1335 and 1345. A second failure to break through the key 65 week MA confirms that the intermediate down trend is intact however the recent trading suggests the bulls may be building a base for a rally.
Today's video for subscribers looks at the recent trading in more detail and our strategy for today's trading session.