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Gold looks vulnerable – but timing is difficult

06 November 2008

The Technical Trader’s view:


This is a momentous chart.

Note the dogged rally from 2000...

The triumphant achievement of the $873 prior High...

The hesitancy at those highs for nine months...

And then the fall.

The precipitous descent through the steep uptrend ...

The smashing of the first support like a ... clunking fist.

It looks poor.


This reinforces the drama of the breakdown through the successive horizontal supports from both the Continuation chart and the Dec chart’s Prior Highs.

Note too, the untidy Head and Shoulders Top that may have formed.

The price has traded around the possible Neckline.

But increasingly looks to have completed....

If that is an H&S Top, then the minimum target is easily measured...

Down to the highs of 2004-5 of $525.
(which is the first clear Prior High support observable in any event)

Look closer still.

But the bears (including us in our Key Trades portfolio) have had to wait for a good short-term signal.

The market broke the twin supports at $749 and $739, and then rallied back.

The market seems reluctant to get above and stay above the 749-739 band.

But traders may want a more positive short-term signal before getting involved.

We think it will come!

Mark Sturdy
John Lewis
Seven Days Ahead

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