Gold Correction Proceeds as Anticipated

| October 21, 2010

Gold closed sharply lower today, approaching support at the lower boundary of the power uptrend from late July.

We expected a relatively sharp decline to follow the unsustainable rise of the previous 12 weeks, and the correction has developed as anticipated, breaking below support of the upper power uptrend and moving quickly down to the lower power uptrend. At the moment, the short-term downtrend appears to be nothing more than a healthy “pause that refreshes,” and a move up to new all-time highs will likely occur after this correction has run its course. From a temporal perspective, we are approximately halfway through the current short-term cycle following the last short-term cycle low (STCL) on October 8.

The next STCL will likely occur in one to two weeks, so the next potentially tradable bottom for short-term traders will likely develop in conjunction with that next low.

Category: Commentary, Market Update


Comments are closed.