Gold Weekly Technical Outlook – March 15, 2010
FMX | Connect – www.fmxconnect.com - (Reported 3/15/10)
Chart 1: Daily April Gold (short-term analysis):
Weekly Recap:
At the start of last week, gold succumbed to the relentless pressure of the bears as an attempt to pierce the 1144 resistance level failed. On Wednesday, the onslaught continued as gold sliced through the 1122 support level as well as the 20, 50, and 100 day moving averages. On Friday, gold attempted to recover; briefly piercing all three moving averages but failed to clip the 1122 level.
Weekly Outlook:
This week, traders will be closely monitoring the 1097 and 1122 price levels. Gold currently resides within the bounds of a short-term channel formation (1097-1122) and a move below or above these bounds may set the tone for gold’s next big move.
In the event that gold breaks the 1097 price level, look for support at 1053. India bought over 5 Billion in gold at around 1050, and has publically stated that it intends to buy more at this level. This will no doubt be a test of India’s strength (as a trader). If they fail to buy more gold at this level, we will most probably see a continued selloff in gold. However, if they follow through on their stated intentions, expect to see gold rally off this level.
If gold shows strength, look for resistance at the moving averages, 1122, and 1144 levels. A close above 1144 may set the foundations for a new move higher.
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Technical Statistics: GCJ0 - Gold April 2010 (COMEX)
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| Date | Open | High | Low | Last | Change |
| 3/12/2010 | 1110 | 1119.5 | 1097.3 | 1101.7 | -6.5 |
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| Period | Moving Average | Price Change | Percent Change | Average Volume | |
| 5-Day | 1112.9 | -33.5 | -2.95% | 128128 | |
| 20-Day | 1117.2 | 7 | 0.64% | 154908 | |
| 50-Day | 1111 | 2.2 | 0.20% | 116490 | |
| 100-Day | 1113.4 | 47.9 | 4.55% | 59898 | |
| 200-Day | 1042.8 | 140.9 | 14.66% | 30402 | |
| Year to Date | 1111.7 | 4.1 | 0.37% | 121081 | |
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| Period | Raw Stochastic | Stochastic %K | Stochastic %D | Average True Range | |
| 9-Day | 9.07% | 29.15% | 47.92% | 19.3 | |
| 14-Day | 23.04% | 41.42% | 56.83% | 20.1 | |
| 20-Day | 34.86% | 54.15% | 67.55% | 20.7 | |
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| Period | Relative Strength | Percent R | Historic Volatility | MACD Oscillator | |
| 9-Day | 39.24% | 90.93% | 13.63% | -17.7 | |
| 14-Day | 44.76% | 76.96% | 13.34% | -12.5 | |
| 20-Day | 46.94% | 65.14% | 15.13% | -11.2 | |
| 50-Day | 50.61% | 53.19% | 19.46% | -5 | |
| 100-Day | 52.38% | 63.65% | 19.28% | -7.4 | |
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High / Low Statistics:
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GCJ0 - Gold April 2010 (COMEX)
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| Date | Open | High | Low | Last | Change |
| 3/12/2010 | 1110 | 1119.5 | 1097.3 | 1101.7 | -6.5 |
| 3/11/2010 | 1108.9 | 1111.7 | 1100.5 | 1108.2 | 0.1 |
| 3/10/2010 | 1121.5 | 1128.3 | 1103.1 | 1108.1 | -14.2 |
| 3/9/2010 | 1123.8 | 1125.1 | 1108.2 | 1122.3 | -1.7 |
| 3/8/2010 | 1136 | 1138 | 1118.5 | 1124 | -11.2 |
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| For The Last | Made New High | Percent From | Made New Low | Percent From | |
| 5 days | 1 time(s) | -3.19% | 5 time(s) | 0.40% | |
| 20 days | 5 time(s) | -3.85% | 3 time(s) | 1.21% | |
| 65 days | 5 time(s) | -5.57% | 7 time(s) | 5.48% | |
| 100 days | 23 time(s) | -10.36% | 5 time(s) | 11.36% | |
| 260 days | 31 time(s) | -10.36% | 5 time(s) | 25.82% | |
| Year to Date | 4 time(s) | -5.57% | 6 time(s) | 5.48% | |
Chart 2: Daily April Gold (long-term analysis):
Long-Term Outlook:
Gold is in the process of forming an inverse head and shoulders pattern, which coincides with the head and shoulders on the dollar index chart (click for dollar technical report). Given the resistance at 1053 as well as India’s stated intention to buy more gold at 1050, the 1050-1060 price range must be watched closely as it may be where the bottom of the right shoulder is put in. A bottom between these levels would result in a lower right shoulder, which statistically tends to add to the performance to the formation (Kirkpatrick 2007).
In the event that gold reverses and makes its way towards the neckline, look for a close above it before trading the pattern (more on this in the next section).
How to trade the pattern:
The neckline is the most important factor and is where the breakout level resides. Do not act in anticipation of a breakout; rather wait until it’s confirmed. Here are some important things to consider:
1. Wait for a close above the neckline to place a buy order.
2. Place a sell stop order below the neckline
3. Put on 1/2 of total capital allocation after a close above neckline
4. Wait for a pullback to test neckline to put on remainder.
Julian@fmxconnect.com
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