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Gold is knocking on the door of trendline resistance on the Daily chart

 -- Published: Wednesday, 22 January 2014 | Print  | Disqus 

Near term Gold is looking constructive for the Bulls with a set of higher lows and higher highs on the 30 min chart and in a given timeframe that is a Bullish trend.  There is potential for Gold to rip out of this near term trendline resistance I have highlighted on the 30 min chart on the left hand side below.  A rising trendline resistance such as this one in my experience has the greatest odds of a sharp breakout as opposed to a downward sloping trendline resistance which has the greatest odds of failure in my experience. Right now the Demand appears to be exceeding Supply on the 30 min chart, and so there is no change in trend on the breakout but potential for strong continuation as I see it.

Now with that being said, the bigger picture is most important as there is the "return line" of a Bearish Channel on the right hand side Daily chart below, which I have highlighted in blue trendlines, and this is significant resistance.  If you are a Bear you are looking for the false breakout and a sharp return back inside the channel, as that swing high becomes a place where any short trade becomes invalidated and also offers a large reward to risk ratio when targeting the opposite return line.  There would be plenty of options in that case to manage the trade in terms of building the position while reducing risk with proper stop loss placements and other adjustments in risk management, money management, and trade management.

This Channel also has breakout potential.  What the Bulls need in Gold in my opinion is a breakout with a surge in Volume from the channel resistance in order to increase the odds for a change in trend from my experience.  Markets need Volume with upside price action in order to get the Bearish trend turned around. 

I see the first white arrow on the chart at the Channel as a "Key Reference Area" to trade from in the big picture.  For now the rising trendline on the 30 min chart is another key reference area to trade from until something new develops.  The breakout from trendline resistance on the 30 min chart may coincide with the breakout on the Daily chart and so there is also potential for large reward to risk when trading on the smaller degree timeframe and it lines up with the order flows of the bigger picture.

Should Gold breakout of the channel with some force behind it, there will be the big test at the next level of trendline resistance where the second white arrow is located on the Daily chart above.  Should Gold breakout there, the path of least resistance will be higher in the Daily timeframe.  And those who ignore the path of least resistance don't tend to do well if they keep that up for long.

What is most interesting is the Gold Miners and the Junior Gold Miners are showing relative strength to the metal lately.  There have been numerous posts on the Blog in regards to breakouts and patterns of "accumulation" in the Miners most recently here.
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 -- Published: Wednesday, 22 January 2014 | E-Mail  | Print  | Source:

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