Whoa! Three days, US$100 revaluation in gold! We cracked the trend at the top of the triangle, and then we continued steadily towards the bottom, hit triangle bottom, and jumped around for a while, before breaking it, the 1700 level, 1675 – 61.8% fib from the CME margin hike sell-off, 1666 – previous significant low and dipped into the sweet sauce at 1650 before churning up into the slightly more savory region of 1660.
From the previous analysis on the triangle in question, there was the mention that there are several areas of upwards sloping longer-term trends that price has to contend with, and the next one following the triangle identified was also touched at the 1650 level yesterday. Implication? watch the bounce. It’s much more long term, and it’s much more supported with physical traders if they were willing to buy at prices higher than this. Beyond that, the euro has taken a fall, but gold has held up somewhat well. Correlation between them is pretty high these days.
Again, we have an equivalent triangle. Translation: there are sequences of successive supports and resistances that needs to be broken, and given the 2-month + length of the triangle, exiting it in this non–massive-break fashion (the previous weekly significant low wasn’t even broken) seems more like a “bleedout” since the 30-40 US$ range seemed a bit too constricting given recent volatility. Now, it’s back to watching the support and resistance levels – most prominently the CME margin fall fibs – again. Fun stuff! Longer term momentum indicators are telling a bearish story however, so my view is slowly shifting towards short-term neutral-to-bearish, and I will keenly watch for any news of quantitative easing, any choppers revving up, or the like.