Wednesday, 28 August 2013

Can you see and heads and shoulders on this chart? 2013-08-28

Here is an exercise. I looked at the 240 minute candlestick gold chart and turned my computer upside down. Here is the equivalent (no need to turn your computer upside down; I inverted the chart already).

Now see if you can see any head and shoulders formations. Are there ten or twenty?

[Update: Now, is this not ironic? This is almost exaxctly the time when the gold chart stopped showing reverse heads and shoulders and changed behaviour to form a large bearish head and shoulders that looks like the above figure, without being inverted!]

Similarities between S&P500 in 2013 and silver in 2011 are no longer really in force - 2013-08-28

In a previous article, I noted similarities between trading in the S&P500 in 2012-2013 and silver from early 2011 as it went on its run up to $50.

Those similarites are no longer really in force, unless one views the 1687 peak on the S&P500 in May 2013 as being parallel to the $49.75 top in silver in May 2011.

However, the S&P has now made a higher high on the bounce at 1705 or so and silver made a bounce to $44 after its $50 spike peak.

Interestingly, the May 2013 peak in the S&P500 was a spike high and the new high is a rolling top. The May 2011 peak in silver was a spike top and the subseuqnt bu lower high was a rolling top. So the S&P has exceeded its spike high, unlike silver.

Initially, I was looking at the May 2013 peak in the S&P at 1687 to be parallel to the $31.25 peak in silver at the end of 2010 and the S&P correction to be perhaps like silver's correction to $26.30 or so in January 2011. That would have given the possibility of a massive further run on the S&P500 to around 2200-2400 based on silver's rally from its $26 corrction low to the $50 top, in a power uptrend formation.

The S&P is now looking more like a different kind of formation. In fact, the domed secondary new high at 1705 this month is more like the formaton of a three peaks and a domed house formation that started last year. If this formation is valid, then the S&P500 could go back down to 1039. In fact, gold and silver showed similar patterns in 2010-2012:

Here is the S&P chart and a generic 3 peaks and a domed house diagram:

Wednesday, 21 August 2013

Silver changed from trading opposite to the US stock market to trading in lock step today: 2013-08-21

I noted that silver has gone from trading opposite to the US stock market to trading in lock step with it over the last couple of days, on the eve of the release of the Fed's FOMC Minutes today. The chart shows silver and the S&P500:



Tuesday, 20 August 2013

As warned on this blog a time ago and again yesterday, the Nikkei 225 has broken to the downside today:

Monday, 19 August 2013

Fascinating setup in the USD-JPY (dollar-yen) and the Nikkei 225 . Potential targets 96.360 and 12054 but indecision remains.

There is currently a fascinating potentially bearish setup in the USD-JPY (dollar-yen) and the Nikkei 225.

[As I mentioned in a previous post:

"Interestingly, both the Japanese Nikkei 225 and the US dollar / Japanese Yen exchange rate (USD/JPY) have similar head and shoulders that have broken down and are being back-tested at the neckline. The Nikkei and USD/JPY charts are practically identical: see some charts in an earlier post. USD/JPY goes down (Japanese Yen strengthens) and Nikkei goes down. I would love to have a figure for the correlation but it looks like it might be 95%!

As mentioned before, the ratio between the Nikkei (measured in JPY) and the 2x bearish Yen ETF (YCS) has been close to constant for the last 3 years. Type $NIKK:YCS into gallery view and see!"]

Anyway, these heads and shoulders on the two charts continue to be tested from the underside. Also, the chart patterns are coiling into the tip of wedge patterns between uptrend and downtrend channels and some uptrending lines have failed. The heads and shoulders are quite dominating looking patterns though and have formed since the Nikkei ended its correction after its crash from the nearly 16,000 high in May.

Note that the downside targets for both are quite close to the late May / early June lows:

The prices are just above some horizontal resistance at present but there are fairly strong downtrends also in play capping the rallies. The upward sloping red lines in each case form the necklines of head and shoulders - these are also capping the rallies at the moment and lead to potential targets are 93.630 for the USDJPY and 12054 for the Nikkei or thereabouts if they are not broken again to the upside!

I have drawn on many more charts but I am getting goggle eyed with them and quite confused. I can't remember if I posted any earlier, perhaps just a couple of daily charts.

Here is an older charts howing the Nikkei H&S more clearly. There has been some trading since it was drawn:

... but not much to change the tone:, except that another, smaller right shoulder has formed (see daily chart below), which has not broken down and the price is above a support line which is at 13,500:
So the fates of the Nikkei and the Yen are not yet decided!
As of right now, the S&P 500 and Dow 30 Industrials have not really bounced or continued their downward move - we have Doji candlesticks on the charts and gold and silver have moved down a bit today but not much.

Saturday, 17 August 2013

Peak technology? My comment for Korelin Economics Report today 2013-08-17

I commented on Al Korelin's weekend show where there was a brief discussion on the fall in the standard of living inthe Western World.

Rick Ackerman is sounding like Harry S Dent on the demographic makeup and falling standard of living in the USA, Europe and Japan.
Rick is right, I think. The same applies to Europe in a big way, including the UK. Baby boomers have to work till they're 90 as Rick says bit will there be any jobs for them? I think not, at least at any wage level people would find acceptable today.

The standard of living in the West will fall in a way that is shocking. Jim Willie describes it as the de-industrialised 3rd world (like Detroit), a very prescient comment. I look to the possibility of a 10 fold movement in Western currencies versus Eastern Asian currencies at some time, to re-balance the world’s trade. Think of the dollar as 50 Philippines Pesos moving down to five. (In 1903, A Philippines Paso was a dollar sized silver coin, struck on dollar blanks at the Denver Mint, so they were 1:1 in 1903. These movements can happen.)

Personally, I feel that we may have reached Peak Healthcare and Peak Technology.

Just from the memory and hard disk size of computers on sale in the last 4 years, the increase has slowed. Moore's law is failing I think, no longer doubling every 1.5-2 years as has been true since 1990. Micro technology and nanotechnology have been great and made many of the wonderful gizmos that Rick has mentioned but it will reach important limits determined by physics in its current form. People were talking of optical computers as the next stage in the 1980s at British companies where I was involved but these have not materialised.

I personally think that 'ordinary' or macro technology actually peaked 40 years ago partly because America reached peak oil in 1970 (and went off the gold standard). Think of transport as the best example.

Macro technology has not progressed in any meaningful way since 1970. The USA went to the moon from 1969-72; never been there since. Space Shuttle was a failure and is retired.

In 1977, you could go from London to NYC in 3 hours at Mach 2.0 in Concorde for 700 a GBP fare. Concorde is not retired after one accident. Now you go at less than Mach 1.0. Supersonic public flight is over.

In astronomy and technology books in the 1970s, you had illustrations of moon bases, trips to Mars and hypersonic international public transport, expected to be in place by 1985-2000. None have been achieved.

I visited Wright-Patterson Air Force Base Museum in 1983 on a trip to the USA. I saw the YF-12, built in 1962, the prototype of the amazing Lockheed SR71 Blackbird spyplane. A Mach 3 plane from 1962! This aircraft is also retired, as far as we know.

The museum also had the Valkyrie, the other most awesome plane I have ever seen. It looked like a parked white swan. A Mach 3 bomber from 1966. We don't have one of those in 2013!

In all these ways, we have gone backwards. Most technology progress since then has been in fuel saving technology, because we reached peak energy a while ago. Micro and nanotechnology is also a sympton of this because these new gizmos, iPhones etc are very small and do a lot, for the energy they take to make and use.

If we get to the end of Moore's law, then we are really in trouble, because both macro and micro technology will have peaked, just as we are at the top of a gigantic credit bubble.

Oh, I forgot. We were on the verge of nuclear fusion power 40 years ago. We still are. No fusion power stations in sight! We are about as far from that as we were in 1973.

I would say ignore all the BS that is talked about the singularity and how we are at the edge of some kind of transformation in our lives due to advancing technology and the continuation of Moore's law. Forget it. There will be advances in this and that but we will need a fundamental new advance to move this forward. For a start, we need to make nuclear fusion power work soon or we are screwed.

Revision Monday 19 August 2pm BST:

You know, I think I overdosed on doom and gloom just there. I went out for a lovely walk on Sunday afternoon (yesterday) after a delicious dinner at a good friend's house. We went to Wicksteed Park in Kettering, Northamptonshire. The sun was out and fluffy clouds were in the sky. There must have been someone who had an accident or was taken ill as we were there, because the Nothamptonshire and Warwickshire yellow helicopter ambulance circled and landed, much to everyone's surprise. It was so cool to see the thing take off and land at such close range. In the end, a 4-wheeled ambulance (without wings) carried the patient away and the helicopter left with its paramedics and doctor on board and no patient. Many people took pictures and waved as they left. (I didn't have my camera of course! Duh!). The yellow whirlybird took a look at us and ascended slightly in reverse into the blue sky, lifted by an invisible force . Absolutely fantastic. Life is for living, isn't it?

Friday, 16 August 2013

Reverse Heads and Shoulders abundant in gold. 2013-08-16

Right, so on Friday I thought there might be a pullback in gold and a bounce in the stock markets.

However, the bounces in the conventional US stock markets were anaemic to say the least and gold was fairly strong and actually closed a little higher, perhaps turning its latest resistance line into support.

Stock markets: Dow 30 and S&P 500:

Gold has an abundance of reverse head and shoulders formations. I have marked in 11 of them:

Note the orange neckline of number 8. The neckline has broken out to the upside and has backtested it as support just before the upmove at the end of the week.

Thursday, 15 August 2013

Gold over $1360, silver at $23 on fall in US dollar.

Following the fall in the US stock markets on Thursday, we see that gold took an increase in price and silver continued to spike higher.

Gold has now exceeded its earlier post-crash high of $1350 by approximately $18 as I write, presently at a price of $1367.50 in 'overnight 'Asian trading. (Of course, it is actually daytime is Asia!)

The dollar had a fairly bad day, falling from 93.9 to 92.6 cents against the Swiss Franc. The US dollar index or USDX is at 81.17, lower down from 81.55 overnight and its high today which was around 81.90. The Euro rallied from $1.3220 to 1.3351, more than a cent.

The Nikkei continues to trade paralel to the Dollar/Yen rate as usual, fairly flat on Thursday night at 13,637 on the Nikkei and 97.43 Yen to the US dollar.

I nailed the downmove in the Dow and S&P500 in last night's post! ;-) 2013-08-15 1527 BST UK Time

This is my attempted learning experience in calling directions and targets in gold and the stock markets. I had some success today.

In last night's post, I forecast trouble for the Dow and S&P 500 coming imminently.

Well, I switched on today (in the afternoon - dear me, I am lazy) and there has been a decent fall in both indices, with both reaching or almost reaching their initial targets. The following chart shows the potential downside targets:

The first target zone on the Dow has already been reached at the red circle on the upsloping parallel. There is a second potential target at the lower parallel, which is drawn from the June low.

For the S&P, I drew in a red downtrend pitchfork and the price has nearly reached its lower parallel (top red circle). There is also a possibility of a target on a slightly lower upsloping parallel (middle circle), which soon meets the new downtrend channel. There is also a lower target on the bottom parallel (bottom red circle) which comes from the June low.

There is a possibility of a bounce from the first target in each case, which is close to where we are as I took the screen shot a few minutes ago.

A breakdown from the red downsloping trend channel in the S&P would be pretty bearish.

I could have drawn a similar downtrend channel on the Dow chart but the target for that would be somewhere near the one I have drawn anyway.

I have done this now. Interestingly the uptrend parallels and downtrend parallels meet at the point where the price has stopped. I think such a location marks a good target for a move:

It will be interesting to see if prices bounce from the bases of the red downtrends now. Perhaps there could be a modest bounce to the red centre lines and a further fall to the lower targets shown in the first chart?

Interestingly, both the Japanese Nikkei 225 and the US dollar / Japanese Yen exchange rate (USD/JPY) have similar head and shoulders that have broken down and are being back-tested at the neckline. The Nikkei and USD/JPY charts are practically identical: see some charts in an earlier post. USD/JPY goes down (Japanese Yen strengthens) and Nikkei goes down. I would love to have a figure for the correlation but it looks like it might be 95%!

As mentioned before, the ratio between the Nikkei (measured in JPY) and the 2x bearish Yen ETF (YCS) has been close to constant for the last 3 years. Type $NIKK:YCS into gallery view and see!

By the way, gold is doing nothing interesting today, nor silver. They have had a nice run up and maybe they need a rest.

Wednesday, 14 August 2013

Ugly charts in Dow 30 and S&P 500? 2013-08-15

Fairly ugly charts are emerging in the Dow and the S&P500. Dow looks worse right now because supports from July appear to have broken down. Both have head and shoulders formations.

Dow 30:

S&P 500:

The Head and Shoulders on the S&P500 has a neckline at 1680-1687, near the prior high of 1687 (orange line). Price has broken down through that line just now. Dow does not look better inthat respect.

Monday, 12 August 2013

This is satire. In no way is it meant to represent the truth! Queen visited BoE Gold vault. 2013-08-12

This is satire. In no way is it meant to represent the truth! The Queen visited the BoE Gold vault some time ago.
If anyone knows the British satirical magazine Private Eye, these are the kind of things that tend to go on the cover of it, with speech bubbles. Here we go:

Gold in green zone. Will pullback happen to test uptrend soon? 2013-08-12

There have been some really great calls from Rick Ackerman and Doc Richard Postma on this market over the past few months; absolutely top class and objective. They are to be found on the Al Korelin Economics Report!

Don't give up resources as your foundation for your show Al. You have the right people and the right subject matter right now!

Guess what? Gold has gone over 1000 Euros today, at 1004 EUR. From an EU perspective (German, say) that is probably an important psychological level.

Gold is breaking out of the downtrend channel nicely. I like Rick’s $1428.80 target. It is practically equal to the important top in gold in late 2010. I never liked that top. It was a quadruple top with the last high of the four being lower. It looked like a rollover or some kind of distribution but the correction went to only $1309 before going above $1500 then to $1920. It was all a bit too much too soon and with 20:20 hindsight, it was indeed that!

I wonder if gold will take a pullback soon. This is a strong upmove. A pullback would confound some people and ditch a few of the momentum crowd who might be piling on here. Maybe abut a $25 pullback now or from a slightly higher level of about $1350 or $1360 would look neat. Gold seems to be slicing through resistance at the moment, a little fast maybe.

There is a lovely new uptrend channel forming that is parallel to the move from the $1180 low:

Ranting Andy Hoffman is also worth a listen: "Ranting Andy Hoffman - Back from China" on today.

Here is my green zone chart:

Sunday, 11 August 2013

Sunday night / Monday morning gold rally --2013-08-13

Nice rally in gold this evening poast the midline of new blue uptrend.

Actually, maybe we can draw in a nice robust uptrend from the $1180 low roughtly parallel to the first one. Doc and Rick cekrman on were apparently correct! Rick Ackerman was looking for $1329 and price went to $1330 in Asian trading early on Monday:

Is gold now in the green zone? 2013-08-11 weekend.

Sunday night - the 14th anniversary of the only (and rainy) solar eclipse in England for a long time.

On Saturday I thought of what I would like to happen in gold. It looked a bit like this. First target about $1332. I didn't really expect it to happen, thought it might pull back a bit first. First target about $1332, then maybe pullback to $1310 and then potential breakout of the downtrend:

The bigger picture. An upmove would take gold close to breaking out of the downtrend if it can be pulled off. I want to see the blur uptrend in force. Friday's close was right on the central median line of the uptrend. It might pull back or go to the top blue line, who knows?:
Friday's close. US dollar turning down a touch at the close and Euro up. However, gold had a perky day even though the Euro was down against the US dollar for much of the day:

Thursday, 8 August 2013

Bearish signs in Nikkei 225? 203-08-09 05:33 BST

I see three potentially bearish factors for the Nikkei:

Nikkei 225 on 8/8/13:
1. failed test of lower median line of of pitchfork re gold Sept 2011 Paul Coghlan
2. failed sloping H&S
3. failing horizontal support?

To elaborate(see also chart below):

1. failed test of lower median line of pitchfork from below after falling out of it - a bit similar to but shorter term than gold at $1800 in Sept 2012 as shown by Paul Coghlan in his gold/silver/SP500 webinar on YouTube that I watched late last night (brilliant webinars by the way);
2. breakdown of sloping H&S  pattern, testing neckline from below as of now;
3. potentially failing horizontal supports @ 13498 and 13680, testing 13680 from below right now./-

See how this turns out. Will it go to 20000 instead?

I haven't looked at the US dollar:Yen rate to see if they are still nearly 100% correlated.

See also my previous post:
"Amazing correlation: Nikkei ratio to 2x inverse Yen ETF"

Goldbug relief? No crash happened - chance may have passed, perhaps + another bullish sign, perhaps.

This is the most exciting and uncertain time in the gold market since the 1980s perhaps, certainly since this bull market began as far as I can recall.

Conflicting signals abound and perhaps indicate a balance between bulls and bears (buyers and sellers maybe I should say) right now.

Never mind all the talk of manipulation. This has always been a manipulated market and always will be until governments and central banks are out of their gold - i.e. until never.

So you just have to watch the trading - and the price!

Slightly magnified view shows that steep downtrend just ran along top of its channel and then aborted as price hit (twice) one of the parallels of the main 2013 downtrend. There ensued a very nice tradable bounce (whihc I didn't spot, couldn't see the wood for the trees! I was too busy watching the short term move):
Now what? Resistance is at $1310 along a line that has held around 6 times recently.

Wednesday, 7 August 2013

Nice little blip upwards to make poetry on the gold chart 2013-08-07 2107 UK time (BST)

In my previous posts
I mentioned the possible new bearish trend. Well, there is a chance RIGHT NOW for gold to make a wonderfully poetic move on the chart, straight to $1180 and straight to a key channel parallel that has been an important low point twice before during this terrible downmove since early April.
Longer term, the red parallel has seen important lows during this downtrend and has been key support. It's the last stop-off before the channel bottom occupied by the two previous crash lows:

Oh, poetry!! Too poetic to happen?

Breakout attempt from steep gold downtrend. Armstrong says Dow could double. Jaitly calls for a boom. 2013-08-07

Many technical analysts remain bullish onthe stock market in the USA, the Dow 30 and the S&P500,. Some forecast 1,700 on the S&P 500 quite some time ago(now reached). Some even proposed 17,000 on the Dow (wluld be about 1,800 on the S&P) and even 2,000 on the S&P 500 index.

Sandeep Jaitly of Fekete research said in his publication in the 4th quarter of 2011:
"The general consensus is that 2012 is going to be a terrible year for the performance of global equities, the Dollar and economic activity generally.
"2012 is likely to witness the beginning of an economic boom the likes of which have never been seen."

Try Googling Sandeep Jaitly The Course of the Exchange, which is his publication title. He provides the Gold Bases Service. He and Antal Fekete are real intellects. I find their articles fascinating and intellectually challenging but sometimes a little difficult to fathom in the case of Prof Fekete, though he is VERY interesting to read.

Martin Armstrong is on today in a written interview, discussing the possibility of the Dow's doubling by 2015. No spike high yet, he says, so no bubble. No euphoria yet; too much disbelief and top calling right now, he says basically. This is not gold in 1980 or the Nikkei in 1989, nor the Nasdaq in 2000.

I have a take on this now. Stocks never really quite had their bubble.

In 1999 the Dow peaked and rolled over. No spike high. Money was flowing out of traditional stocks into the Nasdaq internet bubble stocks and into tech mutual funds (TMT stocks - technology, media, telecomms). The Nasdaq was a bubble, a classic one, burst in March 2000. The highs over 5,000 have not been anywhere near seen since.

In 2007, traditional stocks were booming again but so were debt instruments, property and commodities. Stocks peaked in late 2007 and the money was flowing into gold, silver and oil. Stocks were only part of a much larger bubble. No spike high occurred in stocks (compare to oil!) so still no bubble, perhaps?

So, NOW is when we are getting the general stock market bubble. Property is down, gold is down, oil is below its 2008 highs, bonds may have topped (not certain). Stocks are probably the only game in town. Maybe NOW is when we are going to get the mania in the stock market. Maybe it has a way to go, who knows?

It is interesting also that the dollar has been strongish in recent years, as in the early to mid 1990s as stocks took off and gold was in a BEAR market. Like now. Maybe this will continue - who knows? Or like 1982 when stocks took off and gold entered a bear market.

The path of interest rates does not quite fit in this model; in previous occasions they were starting to fall. This time - well, are they rising or could they fall even more?

The markets are a mystery to unravel!

Talking of mysteries, now to gold. Gold has posted a small breakout from its steep downtrend that I have been watching closely.

Where from here? Who knows? This is a trader's nightmare. See captions on the following two charts, one fromlate last night and one from this afternoon (7 Augut 2013):


Tuesday, 6 August 2013

First obstacle to new downtrend is the uptrend channel floor - imminently. 2013-08-07 at 00:51 BST

The first obstacle to new developing steep downtrend is floor of the uptrend channel that is defined perhaps by the $1180 low. Actually I drew a pitchfork from the second low, which seemed to work out nicely, so there are two possible channel floors.

Anyway, the current price is quite close to both of these candidates for the channel floor. If it breaks down through there, then the uptrend since the $1180 low could be over.

I never did like that uptrend channel anyway. I could not find an Andrews pitchfork to fit, well, so below I have drawn perhaps a better uptrend channel between the $1180 low and the next higher low together with a parallel between the highs that fits OK:


In this case, the uptrend since 28th June has already broken down and the channel floor has already been tested as resistance. Oops!

New steep downtrend just in birth right now, parallel to June crash. Written 2012-08-06 17:37 BST.

Gold is now in a steep downtrend roughtly parallel to the one that marked the 28 June crash. Just starting, maybe there is time to abort it but every hour gets a little worse:

Right now, the bottom of the little downtrend channel I have drawn is at $1240, so if price dropped right now to the bottom of the channel it would hit a low of $1240. However, the slope is steeply downward, so if the channel continues it could go much further, to make a double bottom at $1180 or to meet the channel floor at $1098, close to the 50% retracement of the bull market at $1087.

Bearish action in gold showing more evidently. $1300 fails and $1283 approaches Monday 2013-08-05.

Dear readers,

At present, the downtrend has a firm grip on this market. However, with some larget commercial traders already net long, this could be a suckers breakdown to bring short sellers in before handing their heads to them on a plate.

Action in gold today is not looking nice. A key level is $1283 which is the 38.2% retracement level both of this little relief rally during Jult and of the ENTIRE bull market since 1999. The chart below, as of the weekend, showed a bounce on Friday from that very level: $1282.60:

However today, Monday 6 August, the market is back near that $1283 support and below the key $1300 level. $1300 is important recent support and a key century level. A failure at $1300 would be similar to the failues at $1600 and $1500 that heralded almost immediate crashes in mid April and late June. Each of those showed a small head and shoulders formation with the right shoulder failing and going straight into a vertical crash, as shown clearly above. This time the formation is not quite the same but we could easily have a H&S formaion forming over the next few days and then a crash as twice before.

On a drop my initial target would be $1180, because in a few days time, that level meets a parallel that marked two lows since mid May. There is an opportunity for a big move lower to the point where those lines meet in about a week's time.

See the 3 brown circles in the chart below - the third one could result in a double bottom at $1180.

Of course, there is no guarantee that any downturn would stop there. It could go to the next and bottom level of the downtrend channel, going off the bottom of the chart to $1040-1100, depending on the timeframe.

Actually, I am really getting very tired of the cheerleaders in the gold market who are conning the public into buying at these levels, as they also did at $1900, $1800, 1700, $1600, $500, and $1400. Also, many gold and precious metals pundits have already turned bullish again, even on this relatively measly $169 rally that is already failing here. The $169 rally compares against roughly a $620 drop sincel last September or if you want to see it in real perspective, a $720 drop since the top of $1920 in early September 2011!

At present, the downtrend has a firm grip on this market.

16:10 BST 6 Aug 2013.

Saturday, 3 August 2013

1000Gold’s Gold Report on Friday 2013-08-02. The Bears are still Strong in Gold: Gold bugs are not out of the woods yet!

1000Gold’s Gold Report on Friday 2013-08-02. The Bears are still Strong in Gold: Gold bugs are not out of the woods yet!

This Friday has seen a further deterioration of the position in gold after the failure earlier this week of the second bullish pennant to have formed on the recent rally from the $1180 low.

Basically, there has been quite a lot of economic and government/Federal Reserve news this week and it was expected to have a potential negative effect on the gold price as it often does, for reasons of alleged price manipulation and/or from previous observations of market moves around these kinds of announcements.

There have been two sharp downticks this week, each followed by an immediate snap back rally that has not reached the initial point of the downmove. So the price is stepping down lower.

As ‘Doc’ Richard Postma said on earlier this week, he expected gold to test the area around $1300 and it did so, breaking down through that important support to $1282.60 but rallying back to $1312 by the close on Friday.

It is necessary to see these moves in the perspective of the last 6 months.

1. The correction to $1282 has retraced 38.2% of the rally from the low of $1180 to the recent high of $1348. That would be a neat Fibonacci corrective move for a strong uptrend. However, the price has been in a downtrend channel since 23 July parallel to the well established downtrend - and that downtrend has broken lower as you can also see below. I don’t like that, though I do like the bounce today back into that narrow channel:
2. Guess what? $1283 is also the 38.2% retracement level for the ENTIRE BULL MARKET! So it is actually a key level that took the bounce on Friday at $1282.60:

3. Looking at the bigger picture, there is little to be excited about from a bull’s perspective. The current July upswing from $1180 is hardly stronger than the rally in late April to early May from the crash low of $1321 low.

4. The current rally has broken slightly above the parallel that has held as resistance up to now but was repelled slightly by that parallel today (see red circles below). Will the price action follow a similar pattern to the post April 15th rally and go down to revisit the bottom of the downtrend channel in a path similar to one of the three shown in the chart below? Only time will tell but gold bugs still have plenty to worry about over the next few days or more.

5. The channel floor meets the 50% retracement of the entire bull market soon at $1087. Could this be a possible target in price and time?

6. The target low of $1040-1050 has been proposed by a famous investment bank. That would be the floor of the bull market uptrend as shown below, joining the line between the 2005 and 2008 lows and projecting to the present day:

6. The last week and a half’s trading looks like topping action. If there is not a very quick recovery and a new rally early next week, then maybe watch out below!

7. The July upswing looks ominously similar to a slightly stretched out in time version of the late April rally as shown by the areas marked in blue below:


8. As mentioned before, to escape from this downtrend channel, the gold price must move to about $1350 to get above the top downward sloping line of the downtrend pitchfork, which is drawn from the top of the 12th April crash or alternatively, from an earlier high that was the top of a little head and shoulders that formed just before the crash:

9. Although I really like the pitchfork drawn above because it encompasses much of the trading and it forecast tradable support and resistance points, it needs to be noted that there has been barely any price action in the upper quartile of the channel since the April crash and no re-visit to the upper channel line at all. Anyway, one would not necessarily expect price to break out through the upper channel line immediately on any re-visit to the upper line. It might just act as resistance, at least on the first return there.

10. On the chart below, I mark in blue the resistance that has been in force and has marked the two highs from the rallies in late April and late May (those highs were marked in red circles on one of the charts above). It is of key importance for gold to get above that line as soon as possible:

11. It all seems like rather bearish price action, with convex formations all over the charts. Nearly all of the upmoves decelerate - and nearly all of the downmoves accelerate to form parabolic formations. Maybe that’s why chartists don’t like V-bottoms, because they are a symptom of this kind of bearish action. As the chart below shows, there have been only a couple of tiny upside accelerations recently, one after the April crash and one after the June crash and both occurred before topping action came in!

12. Finally, I noticed a few minutes ago that a parallel that has been in play will meet $1180 quite soon. Could we get a re-visit to $1180 and a double bottom? See below:

13. In conclusion, the short term uptrend has given way to the long term downtrend at this point and needs to re-assert itself right now.
Upside needed: $1350. Old reverse Head and Shoulders target was to be $1421.40 (see here

Possible downside targets: $1180, $1087, $1040 and $890.