Once we broke support a few months ago in the metals market, I began pointing to much lower levels b...
Gold Trapped in No Man's Land
11/07/2013 7:00 am EST
With last week’s decline in gold prices further weakening the yellow metal’s technical outlook, Toby Connor of GoldScents details the next key levels to watch.
At the moment gold (GLD) is at a critical crossroads. If it can move above $1,375, it will confirm that an intermediate-degree bottom occurred last month at $1,251, and start a pattern of higher highs. If, however, gold continues lower and breaks below the $1,251 level, it will confirm that an intermediate-degree decline is still in progress and the recent bounce was nothing more than another bull trap to work off the short-term oversold levels.
Gold Chart With RSI
Actually, based on my cycles analysis, I think we can even narrow the band a little tighter. If gold can move above the October 28 high at $1,361 over the next several days, it would confirm that this daily cycle has become right translated and complete a new pattern of higher highs and higher lows.
If, however, gold moves below Friday's half cycle low of $1,305, it would confirm that the daily cycle has topped in a left-translated manner, and the odds would then be very high that the October low at $1,251 is going to be broken over the next two-three weeks.
Gold Cycle Chart
Until one of these lines in the sand get broken, there is just no compelling reason to place a directional trade in the precious metals market.
By Toby Connor of GoldScents
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