Gold has been in a corrective pattern since the May 2006 peak, attempting to build a base in anticipation of the resumption of the bull market. Now finally, Gold appears ready to resume the up trend with clear technical indicators signaling a breakout is imminent.

Technical Analysis

Price Patterns - The price pattern being played out by Gold since the May 06 highs is that of a symmetrical triangle, which usually breaks in favour of the preceding trend which in this case is higher.
Resistance - The up channel line is containing the up trend.
Support - Immediate support lies below the last low (2) at 600. Major support is at 560. though 600 is expected to hold any immediate correction.
MACD - (Bottom indicator) - The MACD is also in a symmetrical triangle, though in a neutral state, which suggests a break higher in gold could carry someway before the metal next reaches an overbought state.
Elliott Waves - The basic elliott wave pattern suggests an ABC correction which bottomed in October 2006, and subsequent price action supports the start of a new leg higher for GOLD in the forms of Wave 1 UP, and the corrective Wave 2 down. So the elliott wave pattern supports other TA as it should be used as a secondary indicator rather a primary indicator of trend.
% Levels - The symmetrical triangle pattern measures 190 points and therefore key %'s are : 50% = 635, Current resistance, 61.8% = 657. Peak of Wave 1. 100% = 730, May peak, 150% = 825, - 1st Target, 161.8% =847 - 2nd Target. 200% = 920 - 3rd Target.
Up trend Line - .The key support trendline is along the A and C lows. The current correction as identified by wave 2 failed to get anywhere near this support trendline, which is a sign of strength
Inter-market Analysis - What's not gone unnoticed is gold's relative strength in the face of breakdowns in other metals and commodities such as copper and crude oil. Thus suggests strong support for gold during the correction in anticipation of the resumption of the bull market.
Time - Gold has now unwound its overbought state, having corrected for 7 months since the peak in May 06, which sets the scene for a substantial rally in terms of time and price.

Conclusion - Gold is looking very bullish as it is about to break out of the symmetrical triangle pattern, with other supporting analysis suggesting this to be imminent. The up trend is likely to carry gold beyond the previous high set in May 06, upwards and onwards towards to 847 and eventually to over 900, targeting 920 this year !

Buy Trigger - The two key buy triggers for Gold are 636 and 658. With gold at 636, it is on the verge of confirming a break of the first trigger. The best position would be a rolling spot contract. Or longer term investors can hold gold directly at bullionvault.com
Target - A break above 658 would target 847.
Stop-Loss - A position at the current price of 636 would require a stop at 600. A break of 658 at 626.

By Nadeem Walayat

(c) MarketOracle.co.uk 2007

Disclaimer - This Forecast / Trade Scenerio is provided for general information purposes only and not a solicitation or recommendation to enter into any market position, and you are reminded to seek independent professional advice before entering into any investments or trading positions.

The Market Oracle is a FREE Financial Markets Forecasting & Analysis online publication. We aim to cut through the noise cluttering traditional sources of market analysis and get to the key points of where the markets are at and where they are expected to move to next ! http://www.marketoracle.co.uk

This article maybe reproduced if reprinted in its entirety with links to http://www.marketoracle.co.uk

Comments

john allison
06 Aug 07, 21:26

gold

from all reports it seems to be the time to be

involved in the gold market

ranna
22 Nov 07, 08:36

Guest Request for Oil $100

I am writing to you from Press Tv in regards to a show i have on Sunday 24/11/07 at 18:00GMT.

We will be discussing Oil reaching USD 100, and some of the other issues that will be raised are the Iranian Oil minister said the rising of the prices are unreal. Also the fact that gold is higher against the dollar in the USA.

if you do have a representative available to appear on a live broadcast with a panel of other experts located around the world, then please let me know.

kind regards,

Ranna Mosavie

0208XXXXXXX

Post Comment (Moderated)

Subject:

Name:

E-mail address (will not be published):

Comment:

(Note Commenting Issue: If after Submitting you are returned to the Main Index Page then due to site caching your comment has not been accepted. Solution - Click the Browser Back Button to the article page and Press PAGE REFRESH (you should see the message "You are not authorized to carry out this operation") Now re-enter your comment (ignoring the notice) - If all's well then you will remain on the article page after submitting, a moderator will check and authorise the comment. Alternatively EMAIL to comments @ marketoracle.co.uk , quoting the article number.

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2010 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.