The rally to $1244 this month corrected 81% of the July decline to $1156 (slightly better than the 72% ‘Cup and Handle’ retracements in Oct ’80 and ‘Feb ’75). It also closed against the 7/8th speedline resistance from the all-time high of $1265. Such speedlines have produced temporary highs in gold nine times since the bottom at $253 in 1999.
It has been twenty-four trading days since gold bottomed at $1156; average for most swing moves. Along the way prices have held the minor breakouts at $1205 and $1232. Both the failed ‘Cup and Handle’ and the seasonal call for an eight to ten day correction to the lower 20- day Bollinger Band (currently $1185, but rising quickly). The catalyst for a decline would be a close below $1232. Support would likely occur in the vicinity of $1195 to $1210.
The ability to hold above $1232 would suggest that this move develops into one of the more extended swings that occur once every fifteen to eighteen months. The height of the recent four month consolidation would provide upside measurements of $1330 to $1350.
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