Saturday, September 25, 2010

A technical view of gold after record breaking run


From Mineweb.com:

After hitting new highs consistently over the past week technical analysts give their views on where the yellow metal is headed next Posted: Friday , 24 Sep 2010

SINGAPORE (Reuters) -

Here are comments from analysts on their technical views of gold:




WANG TAO, MARKET ANALYST, REUTERS

Spot gold XAU= is expected to rise to $1,539 per ounce by the end of this year, going by its wave pattern and a Fibonacci projection analysis, but a drop below a pivotal support at $1,234 would violate the bullish outlook.

A long-term perspective on the monthly chart back to the 1960s presents a bullish scenario, with the existing wave "C" progressing towards $1,539, the 161.8 percent Fibonacci projection level, based on the length of wave "A", as the 100 percent level at $1,046 has been surpassed in January.

The wave pattern on the weekly chart (here) supports a bullish outlook, because the rally from the Oct. 2008 low at $680.80 is labeled as an impulsive five-wave mode.

The extended wave (5) is pointing to $1,515, as indicated by two upper trendlines meeting at a point, and a 161.8 percent Fibonacci projection based on the length of wave "1". Both the wave pattern and a triangle pattern on the daily chart (here) confirm the bullish views derived from the monthly and the weekly charts, as the rally from the Jul 28 low at $1,156.90 adopted an impulsive wave mode, with the wave "3" capable of pushing the price higher above the upper trendline of a big triangle, after which, gold will speed up the rally towards $1,539.

For a graphic showing the long-term gold technical outlook: here

TOSA ANASTASIOUS, TECHNICAL STRATEGIST, UBS

The medium term trend in gold remains bullish as the metal continues to post fresh historic high's. Momentum and trend studies still appear healthy and this supports the outlook for further gains in gold.

The focus is on $1,300.00 which is the next psychological resistance. Over the medium term, a bull channel gold has been in since Oct 2008 projects gains to $1450.00 over the coming months."

It is worth noting that at current levels, gold is overbought and this raises the chances of a correction over the near term. Key support has been defined at $1157.60 which is the July 28 low although support around $1220.00 should provide a firm foundation on any pullback. Dips would be seen as a buy.

JOHN SCHOFIELD, DIRECTOR, TEMPUS INVESTMENT CORP

As you know Gold is in a very nice long term uptrend, albeit punctuated by regular corrections. The current move targets $1,360 in my view as the rallies are about US$200 from the low points.

There may be temporary resistance at $1,300, being the measured target from the large 08-09 trading range. If the rally-pullback-rally pattern repeats itself my next target will be $1,500 after a pullback to $1,300.

These targets may prove to be conservative if the bull market starts to accelerate (as we would expect in the later stages of a major bull cycle) and the size of any upward moves gets bigger/longer each time.

DARYL GUPPY, CHIEF EXECUTIVE OFFICER, GUPPYTRADERS.COM

"The uptrend line starting July 28 is used to define the continuation of the uptrend as the price moves towards the next target level at $1,355. The September 13 reaction away from resistance and dip below the trend line was temporary.

"The price target level is calculated by measuring the width of the trading band between $1,160 and $1,260. This value is projected upwards and gives an upside target near $1,355."

"The trendline break is an alert signal. Trend reversal is confirmed with a move below the 15-day Exponential Moving Average."

For a technical outlook, click: here

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