Tuesday, July 6, 2010

The Gold Wedge

Where will the price of gold go? It is what everyone is discussing. In just throwing out a quick chart and target my thoughts were a high near 1310 in the overthrow of the top TL of the wedge and then a plummet to possibly near 930. My thinking all along would be that gold would continue to spike with fear, then collapse with the markets (which is still to come - this has been nothing) and then gold shoots for the moon and a +2000 price tag. Since I am a big believer in chart patterns, then this scenario would require a reset of possibly both the upper and lower TL's to get price to go where most think it will.

So, the LT wedge is clear as day. Price at this point is challenging the lower support line and has some serious negative divergences working against any upward price action. Was that the E move and it is down from here? Is there still one more pop in price? I'm thinking if it gets thru support then let's see if it retraces to the 38% fib near 1047 support and regroup there. That 975 area looks like some good support as well.

Now, we all know that the yellow metal (filled with tungsten or not) is a rumored possibly very manipulated commodity. We also know that the recent buying action should have set a nice floor for the shiny metal near the 1100 area. Bottom line is that support is support and if busted, then something will have to answer to the powers that be regarding TA. Again, let's see what the price action is around this support line and digest it. I'm not ready for it to fall quite yet, but you never know. (Yes, I am waiting on this pullback to get uber long gold).