But the sheer selling volumes in GLD (the gold ETF, daily chart below) along with the indicators caution that it can resume downtrending to dig lower. It can do that to, say, 1040/1050, or even back down to the $1000 area, and still be working out a pullback that remains above important support on that weekly chart. The chart indicators and selling volumes suggest that gold will test these lower levels, perhaps after some hesitation after the channel trendline test. Gold would have to exceed last week's high in order to defeat the downswing continuation scenario.
I noticed that Raymond Merriman's comments yesterday describe the possibility of gold being weak, perhaps into March. If gold decides to take that path, then the next great buying opportunity for gold may have to wait a few months. So swing traders should watch the high and low of last week, and how gold trades against those levels. If it firms up and buying volumes appear, fine. But if not - if it can't move back over last week's high and selling volumes continue to pressure it, then being ready for another swing down should be the right way to trade it.
I don't really agree that gold will drop under the $950 area, or retest the $681 lows. There's a lot of support under $1000 because of all that prior consolidation. Theoretically, such a lower retest could happen I suppose. So of course it's smart to keep an eye on it. More likely, gold will retest or just make a partial retracement to the consolidation area, before its next great wave up.
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