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Gold Downtrend Forecast Update

Commodities / Gold & Silver Apr 03, 2008 - 09:17 AM GMT

By: Nadeem_Walayat

Commodities Best Financial Markets Analysis ArticleThis is an update to the gold price forecast posted on the 20th of March which illustrated a downtrend target for gold of $850. Subsequent price action now enables me to refine the forecast trend as illustrated by the below graph.


Gold has reached a short-term oversold state on hitting $875 which has led to a corrective rally back through $900. This rally is corrective and is unlikely to carry much higher in terms of price. The target for the current rally is at 50% of the current impulse decline i.e. $917, at most gold could extend the rally to $920, however the risks are for a sharp continuation of the downtrend towards the refined target range for gold of between $835 and $800. Therefore the current rally presents a low risk shorting opportunity to add to shorts or initiate new shorts with a tight stop over the target max high $920, with stop movement on a decline back through $900 which would imply a resumption of the downtrend. However positions should always be initiated on short-term triggers, the immediate trigger for which is $890, which is expected to rise on today's price action towards $896.

The only caution which signals short-term volatility is the oversold MACD state which requires gold to hang around $900 for a few days to reduce this oversold state. However powerfull impulse moves are more than capable of moving an oversold market to a much more oversold state.

By Nadeem Walayat

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Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 120 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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