Gold situation up to 05-27-2008

Gold is the asset that shows you two things: How the US Dollar is faring and how high is the fright of a financial meltdown. This is why it is quite important for FOREX traders to be up to date in the situation of the metal.

We will try to show its situation with the following weekly chart:

Gold is in an uptrend and its price is governed by a rising channel, with some parallel inside lines (in blue). Currently, the price has reached from below one of these parallel and has been repelled (2 blue).
For guidance from a similar situation we can see what happened when the metal was in a corrective phase (august 2006). Then, it reached the same parallel while the RSI and StochRSI stopped and reversed near 50.
The price is also repelled by the 8 weeks price channel (yellow) that is coming from above very quickly.
If we look at some Fibonacci retracements, we can see that the correction from the top ($1030) has taken 50% of the whole ascent from the $650 area. The last correction up took also 50% of the descent (1 blue).
If you look closely, the MACD histogram was going up but seems to stall and reverse back down now.

Conclusion:

We think that GOLD is going to $800.

The reason for this prediction is that we see now the descent from $1030 to $850 as an A (that accomplished 50%) in an ABC corrective phase. B was the move up to $940 (50% again) and now C should begin and reach, at least, the 61.8% retracement level, near $800

If GOLD should break up over the $950 in an assertive way, this scenario will be annulled.

Disclaimer

By no means do any part of this article recommends, advocates or urges the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author and his company express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this article. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. The content of this article was created with the best known data at the time. The writer and his company are not responsible for the accuracy or completeness of the mentioned data. The writer is not a registered consultant of any kind and so the reader should not see any single part or the whole analysis as an advice for any kind of action in the financial markets.
We always welcome feedbacks: This email address is being protected from spam bots, you need Javascript enabled to view it

About the Author

Moshe Shalom
Head of Technical Analysis Department
ForexManage Ltd
Site: www.forexmanage.com
Email: This email address is being protected from spam bots, you need Javascript enabled to view it