The Glitter of Gold is Sputtering

• Posted by Greg Harmon
• on December 21st, 2011

Gold ($GC_F) has been in a 10 year run higher from the lows in 2001. So what is next? Four different views suggest that the trend will continue lower at least in the near term.

Gold, Point and Figure

The Point and Figure chart above shows a break of the trend lower with a bearish Price Objective of 1370. If it continues to move higher towards 1690 it will signal a low pole warning, but in the meantime the objective is lower. It will take a move over both the 1670 and 1690 area to change that perspective.

Gold, Andrew’s Pitchfork

Looking at it using the Andrew’s Pitchfork tool shows that Gold broke above the Upper Median Line of the bullish Pitchfork in August, leaving all looking for a long term buy signal over the Hagopian Trigger line. That never happened and now it is back under the Upper Median Line and being attracted lower to the Median Line near 1500.

Gold, Fibonacci Analysis

From a Fibonacci analysis perspective Gold is primed to test the 23.6% retracement of the move higher at 1530.08. If it fails to hold there then a move lower to 1286.58, the 38.2 % Fibonacci retracement level would be anticipated, and the 50% retracement at 1089.75. Quite a ways off but pointing lower.

Gold, Trend Analysis

Finally from a traditional trend Analysis, Gold has broken below the 3 year rising sub trend support at 1660and looks headed lower. The Relative Strength Index (RSI) is falling and sloping lower from the 70 level and the Moving Average Convergence Divergence (MACD) indicator is moving quickly towards a bearish cross to negative. The trend remains higher with all of the Simple Moving Averages (SMA) sloping up but it could fall as far as 1205 and not impact the trend. There will be many support levels along the way but the bias is clearly lower now.

All four types of analysis point to a continued move lower. Are you ready for this?

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