The failed breakout of the ’Cup and Handle’ pattern in June coupled with the normal inability to produce a sustained rally beyond June produced a correction to initial support levels in July. Resistance is now anticipated in the range of $1219 to $1232.
The May 31st report looked for a high within 10 days (occurred June 18th) with a correction to the lower moving average band and an RSI <=37 (occurred July 27th).
Updated from May 31st
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The June 3rd report identified the important upside Exhaustion readings in the Euro Gold price, looking for a minimum test of the 20-week average this summer. Once the 50-week average is tested it should allow the U.S. Gold price to stage its next major advance. The current oversold weekly readings on our Summation Index should allow prices to remain buoyant for two to three weeks.
The July 4th report outlined the failed ‘Cup and Handle’ breakout and concluded that ‘the break to $1197 created enough of an oversold condition to allow the market to bounce, permitting a retracement to as high as $1244 ($47 of the $1262 to $1197 decline). The upper Bollinger Band (20, 2) should become a formidable resistance over the next month as the band rolls over. It would take a definitive move through $1260 to negate the current distribution pattern.’ The initial rally was limited to $1218 followed by a decline to $1157. Prices have yet to rally to the Bollinger Band (currently $1219) or the 70% retracement (now $1232), but we assume they could be tested soon.
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