Positive "Monthly" Triangle Keeping Gold Bulls Hopes Alive

For the better part of this week, gold has been trying to stabilize the big loss that it suffered in the month of September. What can keep hope alive for the Bulls in gold is the fact that our monthly Trade Triangle is in a positive position. We would prefer to let this market settle down as we do have a mixed picture at the moment.

Our Chart Analysis Score for gold is -60 indicating a near term trading range. This range is pretty broad based with support at $1550 on the downside and resistance at $1750 on the upside. I think most traders would be better off watching from the sidelines as the volatility continues to contract. Only long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Wednesday and below the 25% retracement level of the 2008-2011 rally crossing at 1631.30. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1782.20 would confirm that a short term low has been posted.

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. First resistance is the 10 day moving average crossing at 1722.80. Second resistance is the 20 day moving average crossing at 1782.20. First support is Monday'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


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