Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21
Ultimate Gaming and Home Working PC System Build 2021 - 5950X, RTX 3080, Asus MB - Scan Computers UK - 7th Jan 21
Inflation the bug-bear looking forward through 2021 - 7th Jan 21
ESG ETF Investing Flows Drive Clean Energy to Fresh Highs - 7th Jan 21
5 Financial Market Surprises in 2021 - 7th Jan 21
Time to ‘Reset’ Your Investment Portfolio in 2021? - 7th Jan 21
Bitcoin Price Collapses almost 20% at the start 2021 - 7th Jan 21
Fed Taper Nervous Breakdown - 6th Jan 21
What Will the U.S. Dollar Ring in for 2021? - 6th Jan 21
Stock market frenzy- Ride the bandwagon but be sure to take along some gold coins - 6th Jan 21
Overclockers UK Custom Build Gaming System Review Heat Test and Final Conclusion - 6th Jan 21
Precious Metals Resuming Bull Market, Gold, Silver, GDX Trend Forecasts 2021 - 5th Jan 21
Trump’s Iran-COVID-Gate Anniversary  - 5th Jan 21
2021 May Be A Good Year For The Cannabis / Marijuana Sector - 5th Jan 21
Stock Market Approaching an Important Target - 5th Jan 21
Consumer Prices Are Not Reflecting Higher Inflation; Neither Is The CRB - 5th Jan 21
NEW UK Coronavirus PANIC FULL Lockdown Imminent, All Schools to Close! GCSE Exams Cancelled! - 4th Jan 21
The Year the World Fell Down the Rabbit Hole - 4th Jan 21
A Year Like No Other for Precious Metals… and Everything Else - 4th Jan 21
The Stocks Bull Market is Only Half Completed - 4th Jan 21
An In- Depth Look At Gold Price Trend - 4th Jan 21
Building America Back After a Dark Covid Winter - 4th Jan 21
America's Dark Covid Winter Ahead - 4th Jan 21
Buy a Landrover Discovery Sport in 2021? 3 Year Driving Review - 3rd Jan 21
Stock Market Major Peak in Early April 2021 - 3rd Jan 21
Travel and Holidays 2021 - Flight Knight Cabin Bag Review - 3rd Jan 21
�� Happy New Year 2021 Fireworks and Drone Light Show from London and Sheffied - BBC�� - 2nd Jan 2
The Next IMMINENT Global Catastrophe After Coronavirus - 1st Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Market Update - Gold Oversold and Near Support

Commodities / Gold & Silver Jun 26, 2007 - 10:12 AM GMT

By: Clive_Maund

Commodities We have recently maintained a neutral/bearish stance on gold, which was not unreasonable given the way the earlier advance had petered out and been followed by weakness resulting in the failure of a long-term uptrend line that signaled a change of intermediate trend from up to neutral/down. However, the subsequent lack of downside follow through to break the price below key support at and above its long-term 200 and 200-day moving averages, combined with emerging evidence of significant accumulation of large Precious Metals stocks has justified a review and a shift in stance to neutral/bullish.


This last statement does not imply that an insipid, vacillating approach is the order of the day. On the contrary, even though we continue to recognize that it could yet break down, the proximity of strong support and the luxury of the highly favorable risk/reward ratio that this affords by means of the setting of judicious stops, means that it is makes strategic sense to go long here with a gusto.

On the 2-year chart we can see how, shepherded higher by its rising long-term 300-day moving average, gold trended upwards earlier in the year towards last year's highs but before getting to them it weakened and rolled over beneath a "Distribution Dome" in a zone of strong resistance, leading to it breaking the long-term uptrend in force from mid-2005, the decline being aggravated this month by a dollar rebound. This retreat beneath a Dome pattern and trendline failure has raised the specter of the entire pattern including last year's highs being a Double Top in the making, a possibility that is reinforced by the appearance of a bullish Falling Wedge on the US dollar chart in recent months.

These developments constitute the foundation of the bearish arguments presented in earlier updates - and they remain valid. On the bullish side of the coin gold has, so far at least, refused to break down below strong support at and above its rising long-term 200 and 300-day moving averages, and here it should be pointed out that gold has found support at and above its 300-day moving average throughout its bull market, only once dropping significantly below it in mid-2004 - so the support near this average is regarded as potent. In addition, studies of the volume patterns and volume indicators in the larger PM stocks that constitute the HUI and XAU indices, the findings of which are presented on www.clivemaund.com have unearthed evidence of heavy and persistent accumulation of these stocks in recent weeks and months that has intensified with passing time, and a bullish 3-arc Fan Correction has been identified in the now uncannily quiet XAU index which is presented below.

These developments taken together strongly suggest that the PM sector is going to break sharply higher soon, which clearly imply upside breakouts by gold and silver.

But how do we reconcile these bullish developments in Precious Metals stocks with the threat to gold and silver price arising from the potential for a dollar uptrend developing, that could yet result in Double Tops completing in the metals? While it does look highly unlikely that the dollar will go on to drop below its key long-term support at about 80 on the index, and the Falling Wedge in the dollar strongly suggests it won't, and we have assumed until now that a dollar uptrend is in the works - and we have seen it rise strongly earlier this month, there is a third possibility, which is that is that the dollar flounders about in a trading range above the support at 80 for some considerable time, giving the Precious Metals leeway to go up for other reasons, such as mounting inflation and a general continuing rise in commodity prices.

Right now we have a rare situation in gold that invariably leads to a big move. The price and its principal moving averages (the 50-day and 200-day) and on this occasion its 300-day moving average as well, are all bunched tightly together, and while the 50-day moving average is not in bullish alignment, the other two certainly are. This is a situation that should trigger a breakout shortly, and while it is still unclear which way it will go for the reasons set out above, the evidence in favor of an upside breakout is now thought to outweigh that for a breakdown. This being so the tactics for traders are clear.

Traders going long at this juncture have 2 huge advantages. One is that gold is not at all overbought here, and is, in fact, a little oversold, so upside potential is very considerable. The other is that, with support so close by and clearly defined, it is possible to set relatively close stops and be taken out for a modest loss in the event that it breaks down.

Traders wishing to play it safer will probably want to wait for the price to break above the Dome pattern, which would mark the end of serious selling. While these Dome patterns quite often signify tops, they often appear for a while until all traders wanting to take profits around a particular level have done so, then the advance resumes.

A break below the support at the March low at just under $635 would also involve a clear break below the 200 and 300-day moving averages, and would thus be viewed as a sell signal - if this occurs traders should get out for safety, with the option of returning later if the picture improves. No exact stop-loss level is given here in order to help avoid stops being clustered at one level, which would make traders who act on what is written here vulnerable to being run out of positions by predators.

By Clive Maund
CliveMaund.com

© 2007 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules