Market Club: Is Gold Ready to Skyrocket?

Oct 9, 2008: 11:36 AM CST

Adam Hewison of Market Club released a video analysis of Gold prices today that I wanted to share with you, as well as provide you with my own chart of daily Gold prices.

Adam discusses how to use the Market Club software to identify larger trend then drill down to the smaller time frame for trade entry – full details are available for MC Members (click to join).

The Video is entitled “Is Gold Ready to Skyrocket?” and Adam assess the past and current trends, as well as asks “Why hasn’t gold surged as many people expected – is it ready?”

Here is a quote from part of the text from Hewison:

“I have just finished a new video on gold that I would like you to see. This new video deals with some of the strange events that we’ve been going through the past two or three weeks, or in some cases several months.

I know most of the gold bugs have been disappointed that their favorite yellow metal hasn’t skyrocketed to new highs. Some people said that we’d hit two to three thousand dollars an ounce when gold topped the one thousand mark a few months ago. I’m not sure that we will see levels like that, but the reality is, we could be seeing more interest come into this market which could push it higher.

In this short five minute video, you will get to see how well our “Trade Triangle” technology has done in the gold market. I will also show you when I think gold should hit its peak.

This is an educational video that is meant to inform you on the dynamics of the gold market and how it can help you improve your trading and timing in the future.”

And here is an annotated chart from Corey on Gold’s daily price:

We see the $920 per ounce level creating short-term resistance (actually it’s failed three times at this level and is lower as of this writing – trading around $892/ounce) which may serve as a formidable level in the short-term – a break above this level could propel prices higher as Hewison suggests, particularly because the momentum oscillator is clearly uptrending and showing a stronger momentum positioning.

A positive divergence preceded the sharp rally from $740 to $920, though we never know how far price will go just from momentum divergences alone – they only warn of increasing or decreasing momentum/acceleration of prices.

It’s hard to draw on the chart because it’s evident just in the price itself, but there’s significant congestion about the $860 – $940 range:  notice the numerous swings (and price/bar overlap) that occurred in that price area.  In Market Profile terms, this could be deemed a “Value Area” or “Balance Area” where fair value has been established multiple times.  Departures from value brought price right back to this area, so it will take a major change to drive prices to a new higher (or lower) value area… in other words, a trend-break move could soon occur as the perception of value shifts.

The weekly chart is in a confirmed downtrend and appears bearish, but note that a break to new highs around $920-$930 on the daily chart would officially confirm the birth of a new uptrend (having made a higher high, higher low, and then taking out the recent swing high).

It’s certainly worth watching (or trading) gold closer, but beware the rampant volatility (as in record one-day price moves) that has taken place in this uncertain economic environment – often gold benefits from uncertainty.

2 Comments

2 Responses to “Market Club: Is Gold Ready to Skyrocket?”

  1. Richard Says:

    I recommend that one be invested in gold, because of financial system instability, lack of liquidity and because of possible inability of the US government to make good on its surety promises of insuring bank accounts, brokerages, money markets and now commercial paper. I recommend diversification of investment in gold in four locations immediately, yes immediately: the gold ETF, GLD, directly through streetTRACKS Gold Trust, and not in a brokerage account; two BullionVault, three GoldMoney; and four a limited number of gold coins purchased from sources like Kitco.com.

  2. Len Fore Says:

    Any info about Leyshon Resources of China?
    Apparently chance of being a major player in a year or two??