Gold’s Bullishness Coming to an End
March 16th, 2010 Posted in Technical Analysis
For the past several weeks there has been a very distinct pattern formed in gold’s 4-hour trading chart. The general trend is clearly bearish, yet what makes this formation interesting is that after every drop, a modest bullish correction is taking place.
• The chart below is the gold 4-hour trading chart.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic and the Relative Strength Index (RSI). The Fibonacci Retracement lines were used as well.
• There is a very distinct bearish channel that was initiated on March 4th.
• The current bullish correction has now reached the upper boarder of the channel.
• In addition, gold has reached the Fibonacci 61.8% level, which acts now as a resistance level.
• The Slow Stochastic will likely form a bearish cross soon. Such a cross will further indicate that the bearish momentum is continuing.
• Such a drop, if indeed takes place, will lead gold towards the $1,100 level.
• Nevertheless, traders should also be prepared for a situation on which gold will breach the $1,122 level. This turn of events may indicate that gold is breaking the bearish channel, with potential to reach higher.
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Tags: Gold, Technical Analysis
