Paper gold put in a pretty good day on decent volume, all in response to MOPE coming from the doves on the FOMC. The key to take away from yesterday is that price broke out and away from the last swing high, and in doing so nullified the short term downtrend. We now have a higher high and need a higher low swing low than 1555 in order to confirm a new shot term up trend. A trader may be inclined to jump the gun and enter here with a stop just below 1555. Price made it all the way up to resistance near 1680 and closed above the all important 18 day moving average. resistance will continue to be the 1680 – 1700 level where everything comes together, the 100, 200, and 45 day moving averages as well as significant chart resistance from previous swing highs at 1685 and 1696. The paper longs will be fired up if we can see a solid push and close above 1700. In very short order I would expect a run 1717 and perhaps back to 1760.
Price action sure looks like a classic bottoming maneuver illustrated by the rounded bottom, often called a saucer bottom. This can resolve in a “tea cup” where price continues to climb and forms the right hand portion of the cup. Then as price approaches the “rim” of the cup (1795) there will be a small retracement and rally that forms the “handle” for the teacup. This formation is bullish and is considered a continuation pattern of the previous trend. This type of pattern may be in play, we’ll see.
As we can see from the expanded view, the previous trend was sharply up following the major swing low bottom at 1523. Also, the inverse head and shoulders continues to resolve nicely. That is about it for today. Remember, this is a chart of paper gold and it is driven by the trading of claims to gold where the claims outnumber real ounces by a factor of 100:1. Trading this chart is gambling, plain and simple. Buying physical using this chart is fine if it makes you feel good to buy with the trend or opportune times for paper trades. In reality, throwing a dart while blindfolded will yield the same result if your intention is to buy and hold until Freegold valuation is at hand. Stack your gold and be happy. Spend your time reading FOFOA instead of obsessing over the gold chart.