Technical observations of RossClark@shaw.ca
Over the years, gold has shown a tendency to make 50% to 60% retracements within rising and declining trends. In the early stages of a trend these retracements tend to overlap the previous trading range, but fail to penetrate the midpoint of the prior consolidation. The rally into September 28th retraced 53% of the decline from the September 5th high of $640 and marginally overlapped the July 24th low of $602.
Now that prices have violated the September support we can lower the important upside resistance level from $626 to $588. A close above there would be viewed as a catalyst for a renewed bull market move. In the interim, resistance should be encountered on 50% to 60% retracement rallies of the break from $607.
Examples of resistance
Here is what happens once prices move up through the midpoint of the' last failed rally'
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