INTERMEDIATE TERM TREND: NEUTRAL
SHORT TERM TREND: BULLISH
VERY SHORT TERM TREND: BULLISH
Gold found resistance yesterday at 1305 after a classic 5-wave impulsive rally leg. The retreat back from 1305 formed a "doji" candlestick on the daily chart and the follow through weakness today suggests a short term top is in place, however the significance of this rally cannot be underestimated.
We have now shifted our strategy from "sell the rallies" - a stance that has served us so well for the last couple of years - to a "buy the dips" mentality.
We expect a retracement here before the rally resumes with targets well north of 1300 in the short term. The recent rally is all the more impressive as it has coincided with a powerful rally in the dollar (is gold anticipating a USD top?), however the recent announcement by the ECB of a huge expansion to QE likely to see further dollar strength.
Equities remain well supported and any dips are being seen as buying opportunities, whilst oil remains very weak near $47 a barrel.
Support can be found at 1280-1282, 1272, 1268, 1256, 1245, 1222-1225, 1210, 1204, 1200, 1192, 1180-1183, 1175-1178, 1172, 1167, 1154, 1145-1147, 1131, 1124, 1100, 1085, 1045 and 1000. Gold has bounced back after breaking below the critical 1180 level and is now moving higher after a classic "bear trap". The break of the intermediate down trend suggests a new rally phase is just beginning.
Resistance can be found at 1282, 1290-1292, 1300-1302, 1305, 1310-1312, 1322-1325, 1333-1335 and 1345. The break of the intermediate down trend line in an impulsive move higher suggests an end to the down trend and the start of a new rally leg in gold.
Today's video for subscribers looks at the recent trading in more detail and our strategy for today's trading session.