Is It Time for a Gold Pullback?

As most of you know by now, gold has had a meteoric rise since breaking over the key $1000 level in the middle of September. After a slight back test, since the 1st of October, gold has climbed to it’s peak Monday morning of $1172. That’s a huge move, basically an uninterrupted rise of 17% in 7 weeks.

It then spent the rest of the day selling off slightly to the $1158 area and currently trades about $1166. So the question is, where do we go from here? Just using my simple trendlines which are pretty steep, it looks like we could easily pull back to the $1148 area which also coincides with the 100ma on the hourly chart. Below is a 4hr chart with the Fibs drawn in from the 10/28 pullback. As you can see there is a cluster of support at just below the $1150 mark. (Click to enlarge)

As we can see below on the hourly chart below that a Fib taken from the November 20th low, shows that a 62% pullback puts it right at $1148 which also lines up with the high cluster from 11/18. Notice that it just bounced off the 38% fib just a few hours ago. As strong as it’s been, that may be all we get for the moment, but I think not. But be wary of standing in front of locomotives, lots of big, hot money jumping onto the gold bandwagon. Every slight pullback has been met with a new wave of buying so far, so if you’re looking to play the pullback, be nimble and watch your stops. Or you can just sit back and watch the show if you feel like you’re too late to join the party on the long side. (Click to enlarge)

Comments

[The Recusant]

A better question would be, is it time for the dollar to increase in value? And since there is no logical reason for the dollar to rise, especially against other currencies, why would gold decline?

2009 Nov 24 12:47 PM

[gambitrader]

Golds move is parabolic, these moves tend to end in disaster, however I am not willing to short gold with Helicopter Ben as FED chairman.

2009 Nov 24 03:42 PM