Gold followed through today after the massive hammer candle on Monday. The low on Monday almost touched the 200 day moving average, something that doesn’t happen very often in gold. The simple truth is that with all currencies around the globe undergoing severe devaluation, physical gold must flow and flow in increasing quantity. For gold to flow the price must be such that people are convinced that paper offers a better path. The central banks and their criminal bullion banks pulled all the stops to scare people out of their gold, but even better, scared them from looking at gold as a safe haven. This serves their purposes in keeping people trapped in a world of depreciating paper that they of course conveniently supply, at a price. The readers of this blog no better and were buying hand over fist. We were buying physical gold that cannot be shorted with a keystroke on some computer. Stay the course and buy the fucking dips.
What can we say technically speaking? Well resistance is 1705 and corresponds to the big swing low off the 1917 swing high. Support is the 100 day moving average at 1637 and the swing low all the way down at 1535. The 200 day moving average represents a $400 off the all time high and a 20% hit. This price will likely never be seen again in gold. Stochastic is trying to put in a bullish cross of the 20 level which is a good sign. Unfortunately, to nullify the current downtrend price will have to take out the swing high at 1825. That is not likely to happen, therefore I see a lower high forming somewhere and then we will have to see a higher low than 1535.
The one year chart shows some interesting things. First, notice how the hammer candle reached all the way down the lower trend line of the trend channel. Second, look where price recovered to intraday after the massive short covering commenced. That’s right, the 100 day moving average. Notice how the 100 day moving average has been the floor for prices during this multi-year uptrend. What this tells me is that the selling was way over done and really shouldn’t have reached the 200 day moving average. The 100 day should have been the extent of the correction, but of course we know the Banksters are desperate. I expect that we will continue higher for the rest of the year and we will see a new floor at 1650 just like 1577, 1424, and 1249.
Finally, the weekly chart is also very interesting. Notice how price almost touched the 45 week moving average, something it has not done since the beginning of this multi-year uptrend. Then price recovered all the way back to the 18 week moving average that has provided support during the entire trend. This tells me that the move to the 45 week moving average was overdone and shows how desperate the Banksters really are. Volatility is here for the duration. Trading is going to get dicey, be careful out there.