Technical observations of RossClark@shaw.ca
All our models called for a low in gold last week. The straddling of the 55-day Bollinger Band, break of the 144-day moving average and violation of the September 28th closing low matched the models we have been tracking. Where to now? The magnitude and sustainability of the next rally should establish the outlook for next six months.
Reminiscent of the silver rally of February to April 2011, we need to keep an eye on key supports and retracements that are allowable during the rally phase of the move while we await potential topping signals. For now, the maximum retracement that is allowable is 62% ($1584) from the December 14th low.
The upside reversal of the equities and commodities in the past week coincides with the top in the U.S. Dollar Index. Look for the Dollar to drop back to the higher of the 34-day Bollinger Band (now 76.29) or the 89-day exponential moving average (now 77.55) into the middle of January.
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