Paper gold set the price for physical gold higher today after the 2 day slap nullified the former short term up trend. we now have a brand new down trend defined by a lower high and a lower low. Price found support right at major chart support near 1625. Today price closed above that support level. At any rate the rallies are coming to end when the 200 day moving average is approached from below. This 200 day moving average has become strong resistance, currently at 1689. It will take a close above this moving average before the big money gets involved long. RSI is moderately headed for over sold territory at 38 and stochastic is just reaching an over sold reading of 21. If support holds here it appears there is a new consolidation range between 1620 and 1680.
Once again for the millionth time since 2000 we are hearing the end of the gold bull is at hand. LOL. I guess a 60 dollar swing in price is sufficient nowadays to make that call. LOL. Pardon my French, what a fucking joke! Paper longs trader only help this nonsense and sadly some of them believe this crap. But, like I always do in these updates, I will thank them for their naivety and ignorance. I will also thank the perpetual short interest for suppressing the price of paper gold and thereby allowing me to pick up more physical at these ridiculously low prices. I am talking about any price with four figures, starting with a 1. My stack is growing and I feel quite fine about that. Maybe we can get lucky and see a re-test of the 1525 level.
The wider view shows the strength of support at the 1620 level. Also the inverted head and shoulders pattern emerges. Some divergence is showing in the technical indicators, shown with blue trend lines. The slope of the RSI trend line is zero, both MACD and stochastic is positive. They all diverge from the negative slope of the price trend line. This suggests possible reversal is imminent. 1613 may in fact be the swing low. A paper long, other than being an idiot, would be wise to wait until a higher high is put in place above 1685 before jumping back in. Under no circumstances would I ever enter a long trade below the 18 day moving average. So I would say the longs have some time to consider their plight and read some more about Freegold. Maybe they can repent and quit feeding the paper short. We can only hope.
Here is the inverted head and shoulders pattern with projection. What you want to see in a valid pattern is a right shoulder higher than the head, check. You want less momentum down on the right shoulder than with the left, check. Look at stochastic and MACD. You want less volume forming the right shoulder as compared to the left, check. So far so good. The projection remains 2080.
Here we are, right on the trend line. Notice the Bollinger bands and how they are narrowing. That says volatility is coming down and is setting up a condition where volatility will be too low. This is never sustainable just as when the volatility is off the charts and the bands are very wide. This tells me that we are going to see a sharp break in price sometime fairly soon, maybe in a couple of months. This assumes the paper market is still functioning of course. RSI is approaching levels not seen since 2008 and is at support. MACD hasn’t been this low since 2008.
This chart shows the long term trend and shows price is still above the support trend line. A big sell off would be required to reach the Fibonacci 38.2% retrace shown. I would be tickled to see this and I would max all credit lines available to buy as much gold as possible. I think a violation of that support level means Freegold is at hand and imminent demise of the paper gold market. Can you imagine the panic out of paper gold with a retrace that deep. It just may be enough to exhaust all available physical gold supply. You think panic in paper gold is scary, just wait until you see the panic when the paper longs figure out that it is impossible to acquire physical gold. Watch what happens when the Comex becomes a cash market, then prohibits settlement in real gold.
This chart shows the importance of the 18 month moving average and how it has supported price since 2000. The current 18 month moving average is at 1580. So contrary to the CNBC imbeciles, there is nothing particularly scary going on here. Look at RSI just now reaching the support zone shown in green. Also, notice that stochastic is at the support zone. Consider that stochastic has not seen this level since the 2008 panic crash. This is a sort of divergence in that there is no matter of panic going on in the world’s markets to replicate the situation of 2008, yet the technicals are showing similar weakness now as was seen then. All of this is coming on the idea that everything is going to be A OK, no need for further QE, we are off to never never land. Yeah right. Nope, this divergence will resolve with a resumption of the current long term trend and higher highs.