A Change of Character for Gold
- Posted by Greg Harmon
- on April 29th, 2016
We all know that Gold had a massive 10 year run higher, culminating in a top over $1900 per ounce in 2011. Since then it has been on a 5 year ride lower. Many that lauded its benefits on the way up seem to have missed the last 5 year trend. Consistently promising that it will turn around. Well their day may be upon us.
With but one day left in April, and Gold moving higher in the early market hours, the shiny rock is poised to break out of a downward channel to the upside. Unless it falls back under $1200 today it will confirm this break out, an unlikely event. The perennial fans of Gold, goldbugs, will tout this as a definitive reversal. And it might be just that.
I suggest you look at it at a positive event in a series of events that need to occur to strengthen the argument. The next would be a move over 1300 and then over the top of the falling channel at 1400. Another would be the momentum indicators moving into the bullish zone. This would happen with the RSI over 60 and the MACD moving over zero. Then a move over the prior support area at 1560 would be icing on the cake.
Until these events occur the rally in Gold might be just a bear market rally. It could be a profitable move none-the-less, but not yet a long term trend reversal. Keep your stops close.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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