Adam Hewison: All Eyes Continue To Focus On Europe

Here we are on the first day of the last week of September, with the end of Q3 approaching on Friday. Are the equity markets building a base to go higher? Or is this just a pause before we start heading back down?

All eyes continue to be focused on the European problem, especially Greece. We still believe Greece will default on their debt. And we still think that the politicians are looking for an easy way out of this economic malaise, unwilling to accept the consequences of their actions.

Last week we saw all the markets under pressure. For the last couple of days we’ve seen some minor support coming to the equity markets. And just today we have seen support come into the metals markets at much lower levels than most folks anticipated.

Unlike silver, the gold market is higher for the year and also has a positive Trade Triangle still intact. This basically indicates that the long term trend for gold remains positive. This market is seeing massive liquidation and profit taking and we expect it will regroup at or around current levels. We do not anticipate this market going straight up from here. Only long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Monday and below the 25% retracement level of the 2008-2011 rally crossing at 1631.30. A short covering rally tempered early session losses and the mid range close sets the stage for a steady opening on Tuesday.

Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this month's decline, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target. Closes above the 20 day moving average crossing at 1801.10 would signal that a short term low has been posted.

First resistance is the 10 day moving average crossing at 1764.30. Second resistance is the 20 day moving average crossing at 1801.20. First support is today's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 70


Has gold found support here? Read "Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity"