Daily Gold – Feb 18
Click charts to enlarge
Chart 1 – A very similar picture to last week with the MACD crossing after the rally which began at the start of this year.
Chart one shows this very clearly and I’ve put on a simple Fibonacci Retracement study of that rise. As you can see we have already touched the 23.6 pct retracement and it providing very good support. When that breaks the target is the 38.2 pct level at 1,670.85.
Chart 2 – The signals here are still overbought and a good correction is still very possible. Look at the RMI as well.
The Bollinger is lending good support and resistance so do keep an eye on it at the upper line.
The RMI is around the overbought line still.
Chart 3 – We could be looking at a typical Dow Curve on the very long term chart. This could be similar to the Nadaq in 2000 where the peak is followed by a consolidation period which is followed by a sell off.
On this dual chart I’ve moved the current gold price action on a weekly chart back in time to 2000 when the Nasdaq turned around.
The Nasdaq pullback was a classic Dow Curve in as much as when a market peaks out after an overblown rally there is a period of consolidation after the peak when the real bears are offset by those who think the pullback is a better level to buy. In 2000 it was a classic and the true believers in the internet miracle fought against those investors who were convinced the whole internet boom was massively overdone.
Massive market rallies, such as we saw on the Nasdaq and more recently gold have to be watched carefully.
I’m not saying we are in the same situation now as the Nasdaq in 2000 but if I were holding gold I’d certainly be keeping it in mind.
