Thursday, 10 January 2013

Gold's technicals suggest short term bottom is in, against backdrop of unfinished long term up trend

I have posted infrequently about Gold in recent months, primarily looking at long term charts, with the theme being "*yawn* range bound within a long term up trend". Things are beginning to look interesting again.

First the short term picture. It seems that every blogger/chartist/twitterer is watching Gold's bull flag, though some are seeing it as a down trend channel. The market is trying to rally from the bottom line. Some hints that a short term bottom may be in are (1) both MACD and RSI are showing bullish divergences in to the most recent low and (2) that recent low tested the Fibo 61.8% retracement of the bull run from May to early October.

To put the above chart in context, zoom out to longer term charts. Neither the weekly or monthly show even the merest hint of a topping pattern, so by default you must assume that the long term up trend has further to go. To my mind, it would be unusual to see a long Gold bull market end without a parabolic blow off top. The charts show no sign of a blow off (yet!)

Zooming out to weekly chart. Range bound but as noted the daily is hinting at a move higher..

Zooming out still further to the monthly chart. Only a move below 1500 would challenge the long term up trend. (see discussion in comments about possible rogue candle in 2005 - may mean trend channel is not accurate, but there is no doubt about trend direction)