24 May 2009

Bullish Gold technicals point to 1200


Getting ready for the next big move in gold (even if it weakens for a few weeks), my bullish projections point to 1192 (so, about 1200) if it passes 1008 and continues "north". Below are some some bullish and bearish ideas, and my charts. First the numbers: While my bearish projections are to 641 or even 521 if gold drops in a big (C) wave (similar to Tony Caldaro's alternative OEW precious metals view), the bullish case calls for the 1192 area for several reasons. One is my long-term Fibonacci extension (based on a "bullish butterfly" Fibonacci pattern in the yearly charts), that if it moves above the 1033 high that completed a 1.382-extension initial objective for that pattern, then 1192 is the 1.618 extension objective for that pattern. The weekly and monthly chart projections support that area too.

A symmetry target on the weekly charts, applying a doubling of the move up from 681 and adding to the recent swing lows, points toward approximately 1190. Interestingly, the monthly charts can point there too. Applying a 1.382 extension to the drop on the monthly charts from 1033 to 681 (as if this could still be part of one large (B) wave movement), calculates to 1167. These numbers are all close enough, and have significance in enough time frames - weekly, monthly and yearly - that I must point them out. Readers know that I've been working with these bullish and bearish alternatives for a long time; also, I see that Tony Caldaro has been too, with his more bullish count marked as preferred count on his gold charts (as I posted a while ago, use the "Gold" label at right to see prior posts on this).

Some factors for the bullish case:
- If gold were going down in a (C) wave, it shouldn't be as strong as it's showing now.
- The shorter-term technical indicators have moved up smartly, although the longer-term indicators haven't followed suit yet. Generally, the technical indicators moving into a more positive position.
- Chris Carolan's comments at Pothole or Not? (5/21/09) · "Does the pothole for gold prices foreseen by the solunar model occur? Or is this break above the weekly net-line a strong enough signal that propels gold prices to the 1064 area of the upper weekly channel? The bottom line is that any seasonally inspired gold weakness should be temporary. The larger trend is up, and the corresponding technical picture is healthy for the yellow metal." See his updated Solunar chart at his post there (which does show the next move as another drop into mid-June however).
- Comments by both Merriman and Armstrong that point out, whether or not the dollar pulls out of its swoon, gold is seen globally as a currency alternative (and as I think on it, countries around the world seem right now in a contest to see which can devalue its currency more for economic competitiveness purposes - so if they're all trying to weaken their currencies, maybe that's bullish for gold!).
- This finally kicked in - there have been news accounts of individuals selling their gold and gold jewelry, and also that recent news story that people haven't been buying much gold jewelry lately. Maybe it is a contrarian indicator. Then again, all those TV ads touting gold coins has me worried. (Has Mr. T surfaced again? (Check out Minyanville's "Mr. T" gold indicator!)

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