Important levels in Gold

Good day traders/investors,

I have a post on Gold for today. This is my first ever on this blog  but I hope to share my analysis on this precious metal more often in time to come.

The last week, Gold price fell from the $1,700 region to the $1,600 region. The 100-day moving average is being tested at the moment. In general, I am bullish on Gold in the long-term and mid-term. Right now, most people are also probably bullish on Gold’s prospects; though we have a camp of people who believe Gold was grossly overbought  at $1,900 levels. As a technical analyst, I will only turn bearish on a financial instrument’s prospects when I see large consolidation patterns on a chart; also, long-term moving averages are very important in determining general trend directions. Right now, I do not see any reason why Gold should correct greatly down to $1,000 – $1,200 levels. The general uptrend is still strong despite last week’s sell-off. Price is still healthily above the 200-day MA. I plotted fibonacci retracement levels taking the low as $1,000 and the high as Gold’s record highs at the $1,900 zone. So far, recent price action has been situated above the popular retracement percentage levels. The 38.2% level is at about $1,550 – which should become a natural near-term downward target for me.

 

Zooming in, I see a confirmed double top pattern. After running up to all-time highs of $1,900, Gold lost steam and plunged below the neckline of the pattern last week. Taking the height of the pattern and projecting downwards, we coincidentally get the $1,500 region, which was a target we talked about earlier.

I believe now will be a good time to build up a long position on Gold for long-term investors using a dollar-cost averaging strategy. At $1,500 – $1,600, this represents a 20% discount from all-time highs – certainly attractive for me.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

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