Gold Extends Pullback within Strong Bullish Trend

Gold (daily chart) as of Thursday (9/15/2011) has extended its pullback after hitting the latest all-time high of $1920 last week. The current bearish retracement is overdue, as the steep run-up from the early July low of $1477 was not indefinitely sustainable. Currently, price action has hit support offered by the trendline extending from that early July low, but the bearish correction does not yet appear to be over. A breakdown below the trendline could extend further down to $1730 support and possibly below. Despite this pullback, however, the overall long-term trend and directional bias continues to be to the upside. Once the bearish correction completes, any subsequent breakout above the $1920 high could make an initial upside target and new all-time high around the $2040 price region, which, in uncharted territory, is the 161.8% Fibonacci extension of the latest bearish correction.


(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)


James Chen, CTA, CMT
Director of Technical Research and Education

Views: 223

Comment by MarlonF on September 15, 2011 at 6:03pm
do you expect the pullback to extend below 1750? or it'll be contained at the current levels?
Comment by mcapitalmarkets on September 15, 2011 at 10:00pm
1670 is a must short term.


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