Near-term warning

Ron Rosen has issued a technical analysis that shows a likely conclusion to the contracting triangle we have been witnessing in gold. This means that a downside break is likely, reaching a bottom around $830 in early October. The trend before the triangle was up and so eventually that should re-assert itself, but a downside break is typical first.

The action in the USD yesterday seems to confirm that a short rally is in store for the dollar.

After the bottom in October for gold, the uptrend should resume and then it’s back to watching for the new all-time high to confirm the start of the parabolic move.

So short-term, keep stops on all positions and be cautious. Gold may move a bit higher but if it tops in the vicinity of the recent high at $1007 or lower, then we are due for a correction, and $830 is a likely target. It may have already topped at roughly $970.

There will most likely be some fireworks by end of year/early next, so in terms of holding onto core positions or physical gold, stay put. If you are using margin or leverage, be cautious and possibly lighten up. There will likely be a buying opportunity in early October.

This entry was posted on 08/08/2009 at 08:55 am and is filed under Gold. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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