Working Money magazine.  The investors' magazine.
Traders.com Advantage

INDICATORS LIST


LIST OF TOPICS





Article Archive | Search | Subscribe/Renew | Login | Free Trial | Forgot ID?


PRINT THIS ARTICLE

TECHNICAL ANALYSIS


So Far, So Good For Gold

07/20/04 09:06:48 AM
by Kevin Hopson

As expected, gold prices found a bottom in spring and have proceeded to move higher. However, prices are coming up on key resistance now.

Security:   $GOLD
Position:   Hold

The last time I touched on gold was in late April. At that time, I was predicting a significant bottom in gold prices, as bullish divergences on the chart and a confluence of support around the $370 level were signaling a potential reversal in this precious metal. For example, both the moving average convergence/divergence (MACD) and full stochastics were putting in higher lows despite the fact that gold prices were declining. This is usually an indication of a forthcoming bottom and coupled with significant support, I felt it was a good place to buy gold (or gold-related stocks).

Since then, gold has made its way back above the $400 level, where prices are now consolidating. However, gold is facing substantial resistance in the $405 to $410 range. More specifically, this is the site of the top black parallel line (or April's downtrend line). Notice how prices have been perfectly contained within the black pitchfork since April, finding support along the bottom parallel line and encountering resistance along the top parallel line.

Graphic provided by: Stockcharts.com.
 
Also standing in the way is the 61.8 percent retracement level from the April-May rally, which comes into play just below the $410 level. Since this retracement level tends to act as the ultimate reversal point during corrections, it is no surprise that gold prices recently found resistance here. However, just because prices reversed here does not mean the short-term downtrend will resume. As a result, I would keep a close eye on the $405 to $410 range. If gold can overcome resistance here, the short-term trend will turn positive and prices could eventually make their way up to the $425 level, the site of the green median line. In the meantime, I would continue to hold.



Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.

Glen Allen, VA
E-mail address: hopson_1@yahoo.com

Click here for more information about our publications!


Comments or Questions? Article Usefulness
5 (most useful)
4
3
2
1 (least useful)

PRINT THIS ARTICLE





S&C Subscription/Renewal




Request Information From Our Sponsors 

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

PTSK — The Professional Traders' Starter Kit
Home — S&C Magazine | Working Money Magazine | Traders.com Advantage | Online Store | Traders’ Resource
Add a Product to Traders’ Resource | Message Boards | Subscribe/Renew | Free Trial Issue | Article Code | Search

Copyright © 1982–2025 Technical Analysis, Inc. All rights reserved. Read our disclaimer & privacy statement.