Gold tests trendline support after falling sharply

Gold has followed a nicely defined trendline since the start of the trading year. Except for a brief move below in May, the integrity of the line has held. The price is moving toward this level now and if history repeats itself, there should be support buyers against the level. If, however, the line is breached (it comes in around 1524), then it could be a clue of some selling pressure as we head toward the weekend.

Resistance is now at 1537 where the markets decline accelerated (on the break of a couple trendlines-see hourly chart above). The 38.2% of the move up from the May low comes in at the 1522 area.

Silver liquidates to trendline support

Silver did in fact move to the trendline support on the daily chart at the 40.71 level (low reached 40.59). It did not take long to subtract $9 from the price (3-4 days) and reminds us all about how large moves can have large corrections.  

The price has bounced off the support levels against trendline and the 38.2% Fibonacci Retracement.  So what now?  The pair is now likely to take a breather and consolidate.  Traders should nevertheless pay attention to key technical levels for clues to direction. 

On the topside, the $42.17 area is the first level of resistance. This is the channel trendline off the 5 minute chart.  A move above this level would next target the $42.49 which represents the 38.2% of the move down today .  The 100 bar MA on the 5 minute chart is also approaching this level (blue line in the chart below).   

On the downside, the support against the 40.85 fibonacci level (see daily chart above) and the trendline are now the same (trendline is upward sloping so with the new day it is higher). A break of the level will have the low for today to get through at the 40.59 level and then 39.75 which is the 61.8% of the move up from the March 15th low (see hourly chart below). 

As stated previously, the CME increasing margin was a catalyst to lower levels.  The market also hit 31 year high. Finally prices rose on speculative demand.  Traders have to realize it is a store of value and safety but it is also an industrial commodity.   Goods made with $18 an ounce silver now require silver at more than twice the level.  Demand for those goods may start to ease as a result.  Plus not everyone is long at $18. There are trades long at $30, $40 and higher. Traders who had large profits now have profits that are much less.  This is what happens in speculative markets. Some may say speculative markets that are supported by too easy credit conditions.  Hot money flows in and hot money can flow out too.

Of course, a move higher can occur as a result of a terrorist event at any time. However that event can not be predicted nor guaranteed.  As a result, our worst enemy, fear takes over and that is what caused the selling today.  The price did not go up, so it had to come down. Traders got scared they bought the 31 year high.

Following technical levels are still the best way to define risk and keep fear to a minimum.  Be careful.  We got a glimpse today, that anything can happen in a speculative market.

Gold tests support. Watching closely.

Gold is mixed today, having moved lower early, higher in London and tries to move back lower in early NY trade. The chart above shows the longer term trend from Feb 14th. There have been two moves below the trendline – each rejected (see yellow areas).  Despite the breaks below the trendline, the market seemed to respect the line as a “borderline” they could trade against – i.e. above is bullish, below is bearish.  I like those clues the market gives.  They help define risk and keep risk to a minimum.

The chart below zooms in and shows that the price is down testing this trendline today at the 1430.98 level. A break below that line has the 100 hour MA at the 1429.29 level.  Note that the 100 hour MA line is also going sideways (blue line in the chart below). This suggests the market is more balanced between buyers and sellers currently and could also signal a move away can be anticipated.

These two  levels should be important levels for Gold today. A break to the downside of each and there should be increased selling pressure.  Holding the level, and the bulls remain in charge. So far the bulls remain in control.  Watch closely.

Gold moves through resistance and heads toward next target

The $1423.50 level was broken and Gold moves higher (see prior post by CLICKING HERE). The next target comes in at $1429.10 where the next topside trendline is found.

Gold tests resistance at $1423.50 area

Gold continues upward move. Tests resistance

Gold moves higher as Mideast tension continues to dominate

Gold has moved higher again today, but the range is fairly narrow suggesting perhaps a better balance of buyers and sellers. With Saudi Arabia talking about increasing oil production, there is less an upward bias.  Nevertheless, the tension in the Middle East and oil prices still at the $100 a barrel price level, the safe haven trade seems to be continue to be in full swing.

Of course the technicals, will give the clues about the fundamentals. So outlining the important levels is important. The price yesterday moved above the shallow trendline that defined the top earlier in the  week (see daily chart above). The low today dipped just below the trendline support $1409.67 level. This level will be a key borderline to watch on the downside today. From the daily chart, the next key topside target would extend up to the $1424 level where the November 2010 high comes in along with the 2011 high (1st trading day of the year).

Off the hourly chart, there is topside trendline that comes in at the 1419.40 level currently. This is a closer target for the pair today and becomes the next target that has to be breached. On the downside, the high from yesterday at the $1410.95 level will be another support level.  If this level and the $1409.67 level (from the daily chart) are breached, some further profit taking can be expected. Until then,however, the bias is still to the upside for the pair.

Gold tests/moves above key resistance at $1379.56 area

With the flight into safety on the reports of further Mideast tension, Gold is finding a bid higher. The price is testing the 61.8% of the mvoe down from the January 2011 high to the low at $1307.95. That level comes in at $1379.56.  The price is at $1380 currently.  The risk is for a move back below the old highs for the day (at $1377 to $1377.70 – see chart below). That level comes in at the 1377.00 level. The market should find buyers against this level if the momentum higher is to continue.

On the topside should the price be able to stay above the key support levels outlined above will be the $1387 area. This area corresponds with the channel resistance from the hourly chart (see chart below).  

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