The divergence that I spoke about in my last chart update was for real and price has moved sharply to the upside. Well, as sharply as paper gold is allowed to move that is. Any surge in gold must be contained and a firewall is always in place at the 1% mark. No such firewall exists of course for downside moves. This has always been the case for paper gold and I suspect will always be the case until the paper gold has been completely discredited. This means advancement must be made through a slow grind, punctuated by the waterfall collapse of price. A smart paper trader will buy the waterfall and sell the over-sold technical state. An even smarter fellow, a saver, can just buy physical gold following the waterfall and accumulate dollars during the grind higher. I really smart guy can use his accumulated cash to buy physical gold following the third gap down during the waterfall, they usually occur in threes, then roll in with low interest credit lines as price continues lower. On the way back up, instead of accumulating cash he pays back his credit lines. Let the manipulation of the paper market pay for your credit expense, and then some.
The short term trend is still down and will remain that way until a higher high is put in place. Currently that means 1685 must be taken out to the upside during this move. Resistance is coming from the 18 day moving average at 1657, then chart resistance at 1680. Support is coming in around 1627. If the trend is to remain intact, I expect price will again reverse lower as we close in on the trend channel depicted, perhaps around 1665. A break above 1680 and close above 1685 signifies a change in sentiment.
A lower higher was set at the close at 1664. To nullify the current downtrend this price level has to be taken out. Also price did close above the 18 day moving average currently at 1657. This provides a possible opportunity to enter long trades earlier than 1685. You should look for a swing high to eclipse 1664 and then a reaction low higher than 1555. If you see this then a new short term uptrend will be in place. The way I used to trade long was to filter out noise and risk by requiring a.) an uptrend defined by at least one higher high and higher low and b.) price above the 18 day moving average and c.) price within the Bollinger band.
The expanded view shows the divergence that was noted last time and shows how that divergence has resolved itself. Divergence is a powerful tool and is a very good predictor of reversal. When the slope of the price trend line is opposite of the technical trend lines, it usually resolves with price coming back into agreement with the technical studies.
The inverted head and shoulders pattern update remains unchanged. The projection is still 2080.
I heard CNBC talking QE3 yesterday, LOL! This only a mere couple days after they said that QE was likely done forever. LOL! Funny what a sharp down day in the stock markets will cause people to think and say. The markets are 100% MOPE and smoke. Sentiment is somewhat rational compared to manic mood swings, and sentiment took the last train to la la land quite awhile ago. We now have HFT algorithms driving a manic depressive zombie of a market. Why are you participating in the nonsense? Disconnect from the insanity and become a saver. Trust me, you will be ahead of the trend and people will see you as brilliant in the not too distant future. You cannot save in the same medium that is being used to fuel this insane market, whether its paper gold or the S&P 500. That medium, the dollar, is doomed to suffer the fate of all other debt based fiat money. Nope, you have to remove your capital from the system. You must save in something that cannot be inflated by a keystroke. You need to save in physical ounces of gold.
The 18 month moving average will support your savings. That is exactly what this chart says. Can you say the same for anything else? Keep in mind, this chart is for counterfeit gold, not the real thing. This chart is only showing how paper gold is valiantly trying to go where real physical gold already is. Sadly, it will not make it in the end and will come crashing back to earth. If your wealth is in paper gold you will be as Icarus when the heat of hyperinflation melts the wax that holds your wing feathers together. Your physical gold already is valued at many multiples of what the dollar says it is worth. Buying now is the greatest bargain of a lifetime.
Why climb to heaven on wings held together with wax? Why not a more direct route where heaven comes to you?