Thursday, June 28, 2012
Gold alert - breaking support, now what?! Technical charts review
If gold does touch or go below $1517, which now does seem rather likely, then it could make for a defined entry, so long as it initiates a pattern reversal upward after tagging or going below $1517. Conversely, if it goes below that - and either fails to reverse upward, or initially goes back up/above but then turns around to go lower again - the next lower target is at $1392 (the 50% retrace I marked on the monthly). Honestly, I think gold could get support at either level.
At first I thought gold really might need $1392. And that remains possible. But now I'm wondering if the mostly sideways nature of this correction implies that it only needs to tag at or somewhat under $1517, before initiating an upward reversal again. Keep an eye on gold to keep track of which scenario proves out.
Fundamentally, the problem seems to be the related combination of deflationary forces and the strengthening U.S. dollar. Gold charted in other currencies may look somewhat different. Again, keep an eye on these levels. If gold gets support at one of these levels, it could have another good move up ahead. I don't want to make predictions yet, but upwards of $2000 seems fair based on the charts, once the correction completes and demonstrates a trend reversal back up.