Gold confirmed the short term downtrend by locking in a lower high to go along with the most recent lower swing low. 1496 is short term support and looks to be broken when considering gold is down $10 in the pre-market prior to the Comex open. The next layer of support is at 1486, with stronger support lower at 1474. Resistance is at 1515. As I have posted for some time now, I think this market could make a play for the 200 day moving average that will be between 1420 and 1440 in time. Anything could derail that theory at any point and drive the risk on trade, then immediately a risk off reaction can occur, all in the same day! Technical analysis is becoming useless a predicting tool and is becoming more of a barometer that accurately describes current state. This is actually fine for investors because they are only concerned with entry points. Buy the dips on over-sold technicals, then hold. Easy. Stochastic is embedded and indicates strengthening momentum to the downside. Rallies will likely be sold as long as stochastic remains embedded below 20. Also, the 18 day moving average is going to put in a bearish cross of the 45 day moving average, a bearish signal that won’t be missed by speculators.
GLD is tracing out a classic consolidation triangle pattern. If the lower boundary holds, it is constructive to the idea that major support at around 143 is likely to hold and a future break to test the all time high is in the cards. A failure to hold the lower boundary speaks to a test of 143 with more action in the future going sideways between 143 and 151.
The divergence in PHYS, the real and 100% allocated physical gold bullion fund, is clearly apparent. Ideally, price trend lines will have agreement with technical study trend lines. Slope should agree. When they do not agree, it says that something is wrong and market action is in conflict with price. Usually price will eventually follow the technical view of momentum and will correct the divergence. In this case price will have to fall to come into agreement with the technical trend. PHYS price action is divided between 2 bands, an upper and lower. A large band is defined by 12.41 on the bottom and 13.70 on the top with 13.0 as the barrier that defines an upper and lower band. Price looks to test 13.0 and decide whether to stay in the upper band or go back into the lower band. If 13.0 does not hold the 200 day moving average becomes a possible target as the lower limit to a broad 5 month period of price consolidation. I would love to a sharp move to this level where I would be a huge buyer on on over-sold technicals.