Gold Post Inside Day, Remains Below 20 Day Moving Average

We want to pay close attention to the gold market this week, as we feel it is very close to a low. We are at the lower range of the Donchian trading channel. This market is also oversold, with a possible bullish divergence on the Williams % R indicator. The MACD indicator is also towards the lower end of its range and could possibly turn up and give a buy signal in the next several days.

We want to be patient and wait for this to happen. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

December gold posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the 20 day moving average. The high range close sets the stage for a steady to higher opening on Thursday. 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 reaction low crossing at 1705.40 is the next downside target. If December renews this year's rally into uncharted territory, upside target are hard to project. First resistance is this month's high crossing at 1920.70. First support is last Friday's low crossing at 1765.40. Second support is the reaction low crossing at 1705.40.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 65


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