Is Gold Set to Rise?

Nov 24, 2008: 12:13 PM CST

Recently, gold prices broke out of a month-long consolidation phase which should send us on a countertrend rally to the upside.  Let’s see this potential devleopment and where might some targets be set.

Gold Daily Chart:

Price formed a swing high near $980.00 in July before falling $300.00 per ounce to a swing intraday low of $680 in late October.  From there, price formed a consolidation pattern (a type of triangle) and broke above both the upper trendline and the falling 50 day EMA – both significant developments worthy of your attention and analysis.

Keep in mind that the broader trend is still down, so let’s not expect any sudden bullish miracles.  To change the tren back to up, price would have to cleanly overcome the $940.00 most recent swing high (resistance) and to add even higher probability of a reversal, we’d also need to break above $980 to $1,000 per ounce to fuel a large-scale bullish fire.

Until then, we need to consider any rallies as technical ‘counter-trend’ rallies with initial Fibonacci retracement targets.

Adam Hewison of the Market Club released a video I wanted to share with you concerning the current structure in gold, including the most recent ‘trade triangle buy signal’ and Fibonacci retracement grids for potential price targets.

Entitled, “Is Gold the Last Store of Value,” Hewison describes these developments and writes:

It has been a difficult time for gold bugs for the past two months as gold has been trapped in a broad trading range which made it seem insulated and immune to all of the financial chaos around it. The action on Friday the 21st put all of that in action to rest as gold soared to trade over the $800 in a matter of hours. This may be the move we’ve been looking for and coming from a two-month base, it seems large enough to propel this market higher.

I have just finished a new video on gold that goes into some depth and shows you potential upside targets for this market. The video can be played on any computer and does not need any special plug-in. It is available free of charge from MarketClub as part of our ongoing educational outreach program. Our goal is to help traders improved the timing and trade selection in a scientific way using tools that are real world tested and have stood the test of time.

Let’s continue to see if this structure continues to play out, and how far it plays, and what that might mean for the broader markets (commodities as a whole, especially oil, have traded roughly in tandem – to the downside – with the US equity markets).

Corey Rosenbloom
Afraid to Trade.com

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