$Gold medium trem uptrend correction – levels to watch

Posted on October 8, 2016
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Gold correction – levels to watch

Click on the charts to enlarge

Hello  traders, in this blog article we will take a look at the Gold positioning after the medium term uptrend which has begun in December 2015. This uptrend has reversed the long term downtrend in the Gold.

On a monthly chart instrument is locked between 34 SMA and 100 SMA (green and red line) 1236 and 1323 level. It was trading above and below falling trend line which has begun in 2011.

gold-monthly

If we move down to a daily chart we can see that instrument has formed an uptrend channel, here defined by a Pitchfork channel we usually use in our analysis, and we can see that upside break out momentum was exhausted in July 2016 and from that moment we have a correction lower and now with a median line break and 200 SMA downside brief break but without strong confirmation. It is important for Gold to hold this level and also entire zone from 1220-1260 for an upside continuation. We can’t rule out brief test of 1230 level but we do expect a good uptrend continuation from this level specially in case of a break and close above 1270.

We have a better view of this whole Gold situation if we look at the street Tracks Gold shares ETF which are in a clear uptrend and now have a strong support at 119 level. Despite the correlation which is of course strong between Gold and Gold shares ETF, we can see in this and previous charts that buyers have now excellent opportunity to jump in to this medium term uptrend. With no interest rate hike from FED on a horizon and bleak USD future upside from both technical and fundamental aspect this could be a winner for the upside run to the Year end.

 

However, keep in mind that market is dynamic and the view could change in the mean time. Success in trading requires proper risk/money management, also as understanding of trend trading DNA theory,  and Inter market Correlation analysis of Bitcoin and other asset classes.

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