by Bill Downey     Price Analysis of Gold and Silver
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Technical Analysis Trading Gold, Trading Silver/ analysis By Bill Downey providing key turning points & charts for investors and speculators in Precious Metals Trading, and Precious Metals Markets

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Gold short term update

24 Aug 2015 11:05 AM | Bill Downey (Administrator)
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The gold rally we had did initially peak at 1126, but the pullback found support just under 1110 and the destruction in the world stock markets, the devaluation of the Chinese Yuan, and the major global slowdown we have been expecting as well as the coming debt default is well underway.

This has spurred some money coming out of stocks and currencies into gold (and the US bond market).   There was a heavy load of short positions in gold and the buying has induced a lot of short covering.

When we take into account that 1080 was a 50% retracement of the entire gold rally since 1999,  prices ran beyond 1126 in a cycle inversion and price has reached the next resistance targets.

On the chart below we can see that 1167-1173 is where we should expect the next resistance point and that has been in play since Thursday.   The pullback to 1149 has held and we are testing resistance again.   The other area of potential is 1194-1204.   We can't rule that out because the PATTERN on the chart since the low looks impulsive.   But lets go to the next chart .



The concern here is silver.   If this were a true bull market taking off, silver should not be acting this way.   They almost always are joined in lockstep during a move.   Of course,  this time we are facing a global currency crisis and certainly that has to be taken into account as gold (in the end) is the ultimate currency.  But we certainly should be on guard due to its action.   It should at least hold gold today in the 1167-1173 area.  Let's look at one more chart.




The currency and stock market panic did invoke a cycle inversion on our last red cycle.  As you can see, pricese began the selloff but the money flow into gold was too much and we have inverted.  This will lead to a blue cycle high and that is a BEARISH rotation when blue cycle highs occur.   But could gold invert again at a blue cycle?   Yes,  but we have only seen 3 in the past 10 years so it is not a high odds favored event.   So yes, it can,  but the odds are low.   You can see we are at resistance here also on the daily chart.   However, if it is penetrated and we close above 1172, then the 200 day average near 1186 will become the next target.  

In summary, its best to lay low for today and see if 1167-1173 holds price.  Cycles still point higher into the end of the week but in order to enter a position here would not have high risk reward ratio's.   Perhaps a pullback to the 50 day blue average at 1137 would be a consideration.   It will be interesting to see how silver react's also as it doesn't look good.   I'll do a full daily update this evening with other charts and dialog and consider if we should enter on a pullback. 










Technical Analysis :: Gold & Silver

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