Gold – 07 Nov

Gold put on a big white candle today on moderate volume, and in doing so rewarded those who bought the pullback from the Bollinger band last Friday. An embedded stochastic above 80 for 3 consecutive days or more suggests a strengthening mark and pullbacks are buying opportunities. Strong resistance at 1770 was breached in an emphatic manner and it’s pretty clear that gold is once again responding as a safe haven. Another swing high is in place and the short term bullish case remains solid unless the swing low at 1750 is taken out. That 1750 level is now support. For traders, stops in place just below the 1680 swing low can now be adjusted upwards to just below the 1750 swing low and protects against any change in short term trend. For Freegolders and and investors, stops are for weenies and time would be better used contemplating important things like FOFOA’s newest post Moneyness. Any day is a fine day to buy physical gold.

Price is at the upper boundary of the intermediate trend channel and I would not be surprised to see a stair step higher similar to the stair step put in as price fell from 1925 to 1775. There are levels every 25 dollars where some resistance will be present. I would like to see price stay fairly close to the trend channel boundary and grind higher. The technical studies are still showing room to run higher. Round numbers are always an issue so 1800 looks to be the target. Stochastic is embedded and any pullback is an opportunity to buy as long a both lines are above 80. MACD is putting in a bullish cross of the neutral line. To sum it up, the technicals are saying the way is clear for a run back to 1900+.

The wider view shows price clearing the Fibonacci 61.8% retrace level. More times than not this indicates a 100% retracement is in the cards.

The weekly chart shows technicals that are constructive to higher prices over the next number of weeks. I still believe that we will rally in an incremental fashion and form either a symmetrical triangle or some sort of pennant that serve as a consolidation pattern. I also believe this pattern will serve as a foundation for a move much higher next year going into the summer. The blue pattern is speculative, but I believe the lower boundary is a good one that should hold on corrections.

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