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Erik McCurdy
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Erik is the senior market technician for Prometheus Market Insight and has been performing chart analysis since 1995. The software program that he developed to monitor long-term stock market trends has correctly identified 92% of the cyclical turning points in the S&P 500 index since 1940. His... More
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  • Gold Approaches Key Long-Term Support Level 0 comments
    Apr 3, 2013 2:16 PM | about stocks: GLD, SGOL, GDX

    The following article was originally published on April 2, 2013.

    Gold closed sharply lower today, breaking below congestion support in the 1,600 area and moving down toward previous lows of the downtrend from October.



    (click to enlarge)

    Our Gold Currency Index (NYSE:GCI), which tracks the intrinsic value of gold as an international currency, closed sharply lower as well. The slight positive divergence that had developed between the GCI and gold in US dollar terms during the last few weeks remains in place, but both daily charts now favor a return to previous lows of the downtrend from October.



    (click to enlarge)

    With respect to short-term cycle analysis, the sharp decline today indicates that the latest short-term cycle low (STCL) likely formed on March 26. Cycle translation remains in question and price behavior during the next several sessions will likely provide the next signal with respect to short-term direction.



    (click to enlarge)

    Moving out to the intermediate-term view, the rebound off of the latest intermediate-term cycle low (ITCL) in early March has struggled during the past two weeks, indicating that a half cycle high (NYSE:HCH) may have already formed during the week ending March 22.



    (click to enlarge)

    The long-term correction from September 2011 has developed into a consolidation formation that favors an eventual resumption of the secular bull market from 2001.



    (click to enlarge)

    However, the consolidation formation is continuing an important test and market behavior during the next few weeks could provide a meaningful signal with respect to long-term direction. Therefore, it will be important to monitor daily price behavior closely.

    We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers. Try our service for free.

    Disclosure: I am long SGOL.

    Stocks: GLD, SGOL, GDX
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