Sunday, March 29, 2009
Gold Bearish, Needs to Break Key Support Levels Though; March 29, 2009
Above is a daily mini gold futures chart that shows that it tested the ascending trendline drawn from the $700 price area acheived back in November. Gold should break through that level Monday or Tuesday which should lead to an immediate drop to the very key and strong support level of $890. $890 has held gold up several times but with every drop to this support level the more it eats away at the bullish defenses that protect it. So when it heads to $890 this time, it should barrel right through it because bullish support should be significantly compromised by this time. That should lead to a big selloff, possibly to the $850, or much lower. Gold has the potential to cascade down into the $600s at any time so I'm not going to be quick on the trigger to take profits. I'd rather just move my stops down and let gold run lower, and let the market take me out of the trade so I don't cut my profits short. But I will take very small profits as it falls; but the majority of my position will remain intact with a stop loss backstop.
Bottom line: gold should be falling for the next week or so and the $850 area is a good target for support but the potential for it to fall much further into the $600s is also quite great.