Gold looks vulnerable – but timing is difficult

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The Technical Trader’s view:

MONTHLY CHART CONTINUATION

• This is a momentous chart.
• Note the dogged rally from 2000...
• The triumphant achievement of the $873 prior High...
• The hesitancy at those highs for nine months...
• And then the fall.
• The precipitous descent through the steep uptrend ...
• The smashing of the first support like a ... clunking fist.
• It looks poor.

WEEKLY DEC 08 CHART:

• This reinforces the drama of the breakdown through the successive horizontal supports from both the Continuation chart and the Dec chart’s Prior Highs.
• Note too, the untidy Head and Shoulders Top that may have formed.
• The price has traded around the possible Neckline.
• But increasingly looks to have completed....
• If that is an H&S Top, then the minimum target is easily measured...
• Down to the highs of 2004-5 of $525.
• (which is the first clear Prior High support observable in any event)
• Look closer still.

DAILY DEC 08 CHART:

• But the bears (including us in our Key Trades portfolio) have had to wait for a good short-term signal.
• The market broke the twin supports at $749 and $739, and then rallied back.
• The market seems reluctant to get above and stay above the 749-739 band.
• But traders may want a more positive short-term signal before getting involved.
• We think it will come!

Mark Sturdy John Lewis Seven Days Ahead

[For the complete and illustrated version of this and future Updates be sure to sign up at www.sevendaysahead.com]