-- Posted Thursday, 21 February 2013 | | Disqus
A death cross is a crossover resulting from a security's long-term moving average breaking above its short-term moving average or support level. Additionally, the long-term moving average becomes the new resistance level in the rising market. In layman’s terms this implies that gold's long term bull run is over and that it could be in a bear phase.
Technically gold’s death cross scenario is there and can be seen from the two charts below.
Let’s get straight to the point and see the daily charts as well as weekly charts separately.
COMEX GOLD DAILY CHARTS
· Since 2003 gold has been trading over the 400 day moving average for most of the time. Gold’s fall below the 400 day moving average has triggered the current fall.
· In the past decade since 2003 gold prices have risen from $255.80 to $1932 an ounce. In any long term bull market a correction of 50% from the high are part and parcel of a long term bull market. So unless gold falls below $1093.90 an ounce long term investors need not be worried.
· However in the short term unless gold breaks and trades over $1615 it can be in a bear phase.
COMEX GOLD WEEKLY CHART
· Since 2003 gold has traded over the 100 week moving average, 200 week moving average and 400 week moving average.
· Inability to trade over 100 week moving average has resulted in the fall of gold and silver.
· In case gold trades below the 100 week moving average after 8th March (after US February non farm payrolls) then it will fall to 200 week moving average of $1410.70 and further to $1276.00.
Our verdict on gold’s death cross:
Unless the 52 week low of $1538.70 is breached and gold trades below $1538.70 for a week , the death cross will not be applicable. A daily close below the 52 week low of $1538.70 will trigger more selling in gold.
Other factors like central bank demand, very high jewelry demand and very high gold investment demand could just reverse the current downward momentum.
Just remember that in any financial market upheaval, retail investors have the tendency of selling at the lowest prices and buying at the highest prices. Do you want to be the in league of retail investors?
Patience and guts is the name of the game for now.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Website www.insigniaconsultants.in, www.insigniaindia.com. Prepared by Manan Somani
-- Posted Thursday, 21 February 2013 | Digg This Article
| Source: GoldSeek.com
