Well things went just about like I thought they might today with a reversal in gold intraday. Even though gold closed lower, price did manage a higher high than Friday and technically speaking the lower swing high from the all time high is not yet set. I expect it will be confirmed tomorrow. Therefore the bears will be crowing about the head and shoulders reversal, complete with projections to 1500. I have an Andrew’s Pitchfork that shows potential resistance and support. 1705 looks next as a test for the bulls where the bottom of the pitchfork lies with the Fibonacci 38.2% retrace level. Next support comes from the swing low at 1705. Finally, the 45 day moving average and the Fibonacci 61.8% retrace level is providing support near 1650. I still favor 1650 as the worst case scenario and will be buying near the 1705 support level
PHYS, the 100% allocated gold bullion fund, did put in the lower swing high and along with the lower low confirms a new downtrend.15.86 becomes resistance and support is coming from a combination of the Fibonacci 38.2% retrace and the 18 day moving average around 15.30. Additional support comes from the Fibonacci 50% retrace and the bottom boundary of the Andrew’s Pitchfork around 14.80. Finally, the last swing low and the last Fibonacci retrace supports near 14.20. The gap almost completely filled except for 2 cents between 14.40 and 14.42. I still have a limit buy at 14.40 and I hope to get another chance to fill soon. I think the 14.0 level is the worst case for PHYS.
Silver isn’t telling me much of anything other than it is hanging tough. As with gold, price reversed in a big way intraday and closed down on the day after trading around Friday’s highs. The trading range is set between 38 and 42 and all eyes are on the last swing low at 38.76. A violation of that support level suggests a test of the 37-38 level is in the cards with a move likely down to the Bollinger band. I like this level with hopefully over-sold technical readings on RSI and stochastic. I am looking at a 45 call, perhaps the Jan 2012 expiration.