Technical observations of RossClark@shaw.ca
When Gold prices get off to a good start in August the initial rally generally lasts fourteen to eighteen trading days and tops out by the nineteenth of the month. Having bottomed at $925 on July 29th we project an optimum time window for an interim high by the week of August 17th. Corrections from the August highs retrace 50% to 70% of the preceding rally before staging the next leg on the upside.
It is now fourteen weeks since the US Dollar Index broke below its 20-week moving average. Dating back to 1986 we find that this is a common period of decline before consolidating or retracing to test the average. Additionally, our two fractal models that allowed for a test and possible minor undercut of the supporting lows of Dec ’08 and June ’09 now call for a rally towards the June highs.
As noted below, rallies in the Dollar back to the 20-week ema (currently 80.92) that produce RSI(14) readings into the mid 40’s present buying opportunities in the gold market. Keep these parameters in mind as we progress though the next month.
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