Monday, April 06, 2009

Gold Drops Below Support

If you've been following this blog recently, you would know that I've been bearish on gold and I've posted about it repeatedly over the last few weeks. Many of you disagreed with my view and have sent me emails questioning my bearish stance but all I can say is the charts don't lie.

Lets review some of the key points which made me cautious to bearish on this market.
On March 16th, I pointed out that volume was beginning to pick up on the down days. You can read that post by clicking here. On March 30th, I pointed out that gold's uptrend line was about to be taken out which you can read by clicking on this link. Then on April 2nd, I did a post which read "Has Gold Tipped Its Hand Today" That post clearly explained that gold was about to sell off based on how it performed relative to the U.S. Dollar. You can read that post by clicking here.

If you look at the above chart you will notice that GLD has clearly broken through support and is now below the low that was made on Fed Day (March 18th). Looks like we will see a test of the year low.


Goldbug said...

You must understand that technicals doesn´t always work with something as manipulated as Gold.
With Gold you must think longterm and fundamental, only ultra shortterm traders should try and trade Gold.
Fundamentals say when the world is in a powertransition from West to East and the moneyprinting machine is heating up you should buy and hold Gold.
The dollar is on the verge of collapsing, don´t expect Gold to go down for long.

Kevin said...

Nothing works all the time, especially technical analysis. It's a combination of tools that gives us a slight edgde.

I agree about the dollar and I am looking for a place to buy gold but I think we will see some more weakness first in the metals. The long-term cycle for gold is pointing upwards which means as soon as I see momentum shift back to the upside, I'll be a buyer of gold and silver.

SD said...

Kevin, really nice blog. Gold might find support at the 200 day MA. Not sure if a retest of the year's lows is in process.,m200&a=&c=

iv said...

thanks a lot for all the updates...i was short gold from ur first post and profit was handsome...

sorry goldbug...

trade them dont marry them!!!

Anonymous said...

Have you noticed the Euro/Yen? Does this provide a decent confirmation of the equity rally for you?

Anonymous said...

It is obvious that a head and shoulder has been completed. IS it though? The etf rallied yesterday and today it is sitting right at the neckline. Now if this rallies 1-2 points from here you will see the short squeeze extraordaire. If not then that Head and shoulders has a target of 75. Lets see what happens.



This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Trading and investing involves high levels of risk. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
Technorati Profile Finance Blogs - Blog Top Sites