Financial Sense

Gold Downtrend Technical Update

by Nadeem Walayat, TheMarketOracle.co.uk | April 21, 2008

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This is a quick update of the Gold forecast trend to between $800 to $830. For the background to the forecast see the two previous articles -

Fridays market action terminated the corrective rally off of the 875 low to $956. The market generated a 3 day swing chart sell trigger on break of 926. What is a 3 day swing trigger ? It is just a break of the previous 3 day's low. For more on trading Commodities and swing charts I highly recommend WD Gann's, How to Make Profits in Commodities, as one of a mere handful of technical analysis books that is worth studying. Note I mean STUDY and not just read. It will drill home the importance of support / resistance and %'s of ranges, as well as basic patterns such as double / triple tops and bottoms.

I will expand on the critical importance of Entry (Open Positions) and Exit Triggers (Targets , 50% of Range and Stops) in a later article so back to gold.

The above short-term gold chart illustrates the the break of a 3 day swing low to turn the swing chart down and confirm resumption of the downtrend towards the target of $800 to $830. Without repeating analysis of the previous articles, I will just summaries that Gold is an an corrective ABC pattern, of which A and B have been completed. Yes, your probably wondering will it be a three wave ABC decline from here ? WELL that would be too easy, therefore I expect something a bit more complicated and volatile, maybe 5 waves, or 7 for some sort of an eventual double bottom pattern, anyway the immediate trigger is a clear SELL to target a move to $800/$830. The immediate Exit Trigger (Stop) is above the high of 956.20 therefore 957.

Copyright © 2008 Nadeem Walayat
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