Short Term Gold Losses Confirm Bear Scenario

The Commodity Specialist view - In our last Gold Update we had noted that there was a weakness creeping into the chart structures that put us on the alert for a bear attack. Latest developments have confirmed our suspicions.

• WEEKLY CONTINUATION CHART: For some weeks we have been noting in the Commodity Specialist Guide that the whole recovery from 2008 low looked like a type of 5-wave/ impulsive structure, a third/final upleg presumed commencing from the 1045.20 Feb low. Our latest Fibo projection had been reached, and the subsequent slip back has now given a further bear signal on the Daily chart. Here, keep in mind the 23.6% pullback level, at 1127.
• DAILY CHART – AUG-10: After earlier failure to hold onto higher levels above the previous 1230.70 peak, latest weakness has, after recent violations of small channel base support and 38.2% retracement, breached the 1170 support area. This provides a bear signal, now favouring sellers on rallies. The fact that the Feb/Jun chart structure was similar to that on the Weekly chart (impulsive, but could have run its course) served as a bearish warning too. Now, the first downside target is the 1133 61.8% pullback, which nicely coincides with 23.6% on that Weekly chart. Perhaps more important from the point of view of medium term momentum is the lower support implied by the bull channel base projection at 1080.00 currently.

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