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TECHNICAL ANALYSIS


Gold Standard

04/27/11 03:56:12 PM
by Austin Passamonte

Here's the midterm price outlook for Comex gold and silver futures.

Security:   ZG, ZI
Position:   N/A

Precious metals have been on a one-way trip lately, and the speed of travel has accelerated. You cannot turn to or tune into a news broadcast of any kind that doesn't mention the parabolic prices of silver and gold. Gold and silver markets certainly are headed straight up into the air. Is this current price action sustainable?

FIGURE 1: ZG, DAILY
Graphic provided by: NinjaTrader.
 
Sadly enough, no one rings a bell at market tops or bottoms. Wouldn't our jobs as traders be much easier if they did? Meanwhile, gold futures have broken out to the upside from a six-month ascending pennant formation (Figure 1) with a clean break-through the triple-top high, crisp pullback into prior resistance now turned support and extension upward from there.

FIGURE 2: ZG, DAILY
Graphic provided by: NinjaTrader.
 
Speaking of extensions -- price levels at the current $1,500+ zone are bumping into 1-2-3 Fibonacci projection targets. Based on that, coupled with where price has come from recently, it's not at all surprising if gold retraces toward the 1460-1470 area for another test of the base before sustaining higher levels. See Figure 2.

FIGURE 3: SILVER, DAILY
Graphic provided by: NinjaTrader.
 
Silver futures have lagged the price of gold but are doing their best now to play catchup; $50 and $60 price targets are being bandied about like they are automatic straight from here (Figure 3). A pullback to the pennant apex trendlines near the 41 area is more likely to happen.

Parabola surge moves in commodity markets often correct in similar fashion. All currency pairs and quasicurrency (precious metals, crude oil) markets have all done exactly that of late. Do not be surprised if v-turn pullbacks are the next directional moves dead ahead.



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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Date: 05/03/11Rank: 1Comment: e-mail del. DAYS!!!!!!! late.
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