Current Gold Price Structure

Dec 24, 2008: 10:38 AM CST

Gold prices have been rising as the US Dollar Index has detiorated towards the end of the year.  Let’s take a look at the weekly and daily price structure to see what’s happened and what might be in store.

Gold Prices Weekly:

On the weekly chart, price is still in a confirmed downtrend, which is evidenced by lower highs and lower lows, as well as the 20 week EMA resting beneath the flat 50 week EMA… however, these lines would converge and cross bullishly with just a little more buying pressure coming into the market short-term.  Notice that price is maintaining a tenuous grasp just above these levels – it would be immensely bullish if gold could hold above the $825 and preferably the $850 price levels.

The prior candle was an “Shooting Star” with a long upper shadow (wick), which as you can see from the previous downturn (when the candle appeared before), this is generally a bearish candlestick.  We’re forming a doji currently, but keep in mind the week is half-over and Thursday is Christmas.  Volume this week across virtually all markets will be much reduced from normal as a result.

I wanted to show something I normally don’t highlight – there are three valid trendlines at work (more actually, but I’m just focusing on these three) which show price bound between two zones.  Initially, there was a type of parallel trend channel down (I didn’t extend the lower trendline to show this properly) which bound price in its zones.

Currently, there is a downward sloping trendline active about the $900 level which could cause buyers some problems, however if this resistance is broken, it would mean an instant turnaround has occurred in price and that this massive corrective pattern may be coming to an end – watch the $900 level very closely.

Let’s drop down to the daily chart for additional clues.

Gold Prices Daily:

From an educational standpoint, price completed a Bull Flag or “Measured Move” pattern recently into the 200 day moving average, as well as the price projection point for the pattern (price can find resistance or support at classic price projection points).

Also, price has officially confirmed a fresh uptrend on the daily chart, as evidenced by price making a higher low and then a higher high.  Also, the 20 day EMA has crossed above the 50 day EMA (green arrow) which helps confirm this structure.  An important – critical – test is coming up should price retrace to the $800 – $820 level.  This would indicate “confluence support” via these two moving averages, and we would need price to hold at these levels to officially lock in the fresh, new (potential) uptrend.

There’s an interesting confluence about the $800 to $850 level.  Price is finding resistance via the 200 day SMA but is expected to hold support at the $800 level, which is confluence support from the two daily EMAs.  Again, watch this area closely – failure here would be devastating for the bulls.

Topping it all off, we have a slight negative momentum divergence that set-up into the new $880 price highs – that’s a miniature non-confirmation, and shows slight weakness on the side of buyers – but it’s only one piece of the puzzle.

Continue to watch gold prices, especially these critical levels I’ve mentioned, for clues of what might be in store.

Corey Rosenbloom
Afraid to Trade.com

13 Comments

13 Responses to “Current Gold Price Structure”

  1. toad37 Says:

    Great post Corey. Happy Holidays. You should be very proud of your blog my friend, it is one of the very best!

  2. Corey Rosenbloom Says:

    Thanks Toad! And thank you for your supportive and thoughtful comments. I always love hearing what you and the readers think – I’m hoping to make this more into a discussion or sharing of ideas with each post.

    Happy holidays to you as well!

  3. Dominick Says:

    Thanks for another educational anaylsis Corey. It is always appreciated. Happy Holidays.

  4. Corey Rosenbloom Says:

    Thanks Dominick! To you as well!

  5. Lisa Says:

    Merry Christmas, Corey.

  6. Corey Rosenbloom Says:

    You too Lisa!

  7. dacian Says:

    Thanks Corey for the analysis. Happy Holidays and we’re looking for the same quality here at afraid to trade in 2009!

  8. David Says:

    I am short gold since 880 , my primary target is your 800 and sedondary target is 650 which is the major support line.

  9. Don Says:

    Great analysis. Afraid to trade is right. I’d be afraid to buy if it hits 900; not saying it wouldn’t work.

  10. nawaf Says:

    thanks, but can apply elliotte wave on gold
    specially weekly chart i think we r in d
    from corrctive wave C isnt that ?

  11. NotAfraidof Trend Says:

    Corey, I have become a regular visitor to your blog who greatly appreciates your sharing of your hard work with others. Thanks!

    Seasons Greetings & Happy and Prosperous New Year to all!

  12. Corey Rosenbloom Says:

    Nawaf,

    We’re in a corrective phase, and I hate to punt on the question, but the corrective phases and complex corrections are some of the most difficult structures to identify in real-time in Elliott Analysis. My skill level isn’t up to that standard to make a public assessment on the intricacies of the current gold corrective phase. It would appear – perhaps – that the corrective wave is ending soon, but as for the exact count, I’d leave that to more experienced Elliotticians.

  13. Corey Rosenbloom Says:

    Don,

    Breaking above $900 would confirm a price breakout and potential impulse wave of a larger Elliott move. Also, price closing above $920 would officially ‘super’-confirm an uptrend on the daily chart. There’d likely be a re-test or pullback, but odds would dramatically shift to the bullish camp if buyers can push us above $920 soon.