Gold closed up on a solid white candle Friday after establishing a lower low. The pattern is clearly tracing out a downtrend defined by a lower high and a lower low. Price also remains below the 18 day moving average which gives the bear camp the technical advantage. Bears will see the 18 day moving average as resistance and will put on short trades as price approaches. There is good news however as the market opens. Gold is up by 6 dollars and it appears the the swing low of Friday will hold today as price works toward the last swing high at 1850. If that swing high is taken out the chart takes on a neutral trend bias. Also, a close above the 18 day moving average at 1831 robs the bears of ammo for new short positions.
Support has essentially held at 1790 where previous swing lows and the Bollinger band provided a floor. Further support comes from the the swing low of Friday and the Fibonacci 38.2% retracement around 1755. Resistance is coming from the 18 day moving average at 1831 and higher at 1850, the last swing high. then we have a stair step to climb with resistance at each former swing high and the Bollinger band at 1903.
I see the 45 day moving average (1727) as very solid support and a floor to price. The Bollinger bands have narrowed and I believe a strong breakout to the upside is coming soon but not before the Bernank speaks following the FOMC meeting.
PHYS, the real and 100% allocated gold bullion fund, is showing the opening for gold on the market, essentially flat on the Friday close. So the 18 day average is holding as resistance for gold, and the 20 day moving average holding for PHYS. I have the potential divergence annotated on the chart with the neon green lines showing that the technical studies are in conflict with price. When this occurs and is confirmed, a reversal occurs. I believe we are going to see that price will fail to confirm the negative bias in the technical studies characterized by the negative sloping trend lines. I see price finding support at the 15.75 level, with additional support coming in at the swing low of Thursday at 15.53. Resistance is the 20 day moving average followed by the swing high at 16.24. For now I see the bottom channel of the Andrew’s Pitchfork containing price.
PHYS should be your choice if you are constrained in retirement brokerage accounts such as 401ks and other employer sponsored retirement plans and cannot hold physical gold bullion in your hands.