|Gold is always a safe haven when equity markets correct and also when the world is faced with uncertainities such as the current terrorism threat. In a previous article, I discussed a breakout in Platinum futures and predicted a breakout in both gold and silver futures as well. This seems to have occurred. Gold futures seem to have completed an intermediate downtrend on the daily chart that appeared as a bullish flag on the weekly chart. Gold has also broken out of a flag on its weekly chart and now presents an excellent entry opportunity in the long-term bull market.|
|Figure 1: Gold's daily chart.|
|Graphic provided by: eSignal.com.|
|Looking at the daily chart, Gold has broken out of a downward channel. I have calculated an initial target around 4500, as this consolidation channel can be assumed to be in the middle of an upmove. |
The daily RSI has broken out of a double bottom pattern. The RSI can be analyzed for chart patterns in the same manner as price movements. A breakout of a bottoming pattern on the indicator adds to the confirmation of the breakout of the price chart. The MACD histogram shows a bullish divergence with the price. This is a very strong signal indicating that Gold futures are bottoming in the short-term.
Figure 2: Weekly chart of Gold.
On the weekly chart, gold seems to have offered yet another opportunity for traders to enter in the long-term bull market. An entry set-up that is extremely useful in any time frame is the 20-period moving average. Long trades can be entered as the price goes below then back above the 20-period moving average. The weekly chart also shows a bullish flag breakout, confirming the continuation of the uptrend. The stochastic indicator can also be used to enter a trend when it reaches the oversold level and loops back above it. The weekly RSI continues to find support at the 50 level, confirming long-term strength in the Gold market. A target of 4475 can be calculated from the flag pattern on the weekly chart as well.
|With equity markets weak and the world threatened by terrorism, Gold remains one of the best long-term trades in the current investment climate.|
|Title:||Chief mkt strategist|
|Phone # for sales:||9871066337|
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