The Warning
As this blog is suppose to be my trading journal-in-training, please do not take any of comments as the basis of your trades or decisions.
Not so rosy outlook for gold in the next 6 to 12 months.
The Really Deep Drop
The uptrend support line (which I don't use for trading) on the weekly chart had failed by breaching the $1520-$1535 demand zone with conviction, reaching the next demand zone at $1304-$1348.
Significant zones
Demand Zone: Looking at the speed of the price bouncing off the demand zone at $1304-$1348 tells me that this is likely to be the new floor for the next few months.
Supply Zone: The $1590-$1617 supply zone looks like the most immediate area where prices can take a bounce off the current retracement swing(CD swing).
What can happen next
As much as I am bullish on gold on the long term, I doubt it will be able to cross the $1590-$1617 supply zone with the current retracement swing(CD swing). Traders who had taken a long position at $1530 and had not closed their positions are likely to sell off at the psychologically important area between $1500-$1600.
I am expecting prices to stall briefly at $1478-$1496 before moving to $1590-1617 by September 2013. After which, in the absence of a major event, prices are expected to bounce between $1304 to $1617, until March 2014.
Should another rout occur in March 2014, we may even see the prices drop to the next major demand zone at $1154-$1217. If prices is able to breach the $1200 demand zone, my guess is that the market is very broken and the divergence of paper and physical gold would have reached the limits of fairy tale telling.
