ker.nulov@gmail...'s  Instablog

I have been waiting for gold to start a good bear trend for a long time, and now it is an excellent time for it to reverse.

I want you to look at this yearly gold candles.

(click to enlarge)

2010 was up in full candle form. 2011 is a shutting start candle. And 2012 looks like failed continuation move upwards. Given the setup on the USD index we have good chances that this year the selloff in gold accelerates to close the year down, like pictured. Important yearly level is 1450, it is the opening of 2011 and close of 2010, so, closing bellow it will be a nasty yearly top, with 2013 being a full candle down.

Now let's see a possible channeling on the monthly chart

(click to enlarge)

This is the best channeling I can find at this time. The symmetry is in a triple channel form. A double channel hit is a strong pattern which usually drives the price to the other channel boundary, but the problem is we don't have very clear boundaries here, except for the first and the 4th lines (or maybe the 2nd too) , so this makes me think there is no good support levels until 650 or 700. I am targeting, however, a retracement from 1180 to 1340 because 1180 seems to be the strongest resistance/support level traded above 1040, it is the only level that was hit twice in a 8 month timeframe. It is also in the middle of the 3rd channel line, which could happen to be weak line. I think we can expect strong support to come at 700/650 levels, and this my 'positive' outlook for gold.

The worst outlook is to hit 430 level, repeating the same thing happened to oil. This is how it would look like

(click to enlarge)

If this year we close below 1450, 2013 should be a full (yearly) candle down, and the only support gold hasn't tested well through its trading history is 500. So , we can expect to temporarily break 500, to reach 430, and then close the year at 520 or slightly above 500.

Monthly candlesticks are also bearish, we have dark cloud cover in Octo ber at the top of the range passing at 1780.

After this year's february's monthly candle turned up it was clear there is not going to be any good for shorts this year. But 2012 could the reversal candle for the entire year, which is I think going to happen.

On the monthly chart we see a clear double top pattern.

(click to enlarge)

There is also a rising wedge. According candlestick patterns double top will be confirmed by November closing down. However, the wedge still has space to trade and close December up inside November's candle. But whatever the outlook will be, the top on US indices is in, so a short position can be put now. My target for the next year is 1450 level.

Just to remind, this target is calculated as inverse relation to the target on the USD index, which has to achieve either 95 or 105 next year. (Nasdaq's 1450 corresponds to 95 on USD) Fundamentals are deflationary and has been since 2008, but we have a lot of speculative money playing, this why we have years of rising prices on all the instruments.

Good luck to all the bears.

Current weekly support/resistance levels for gold.

Bear case:




and Bull case:




It is a tricky situation, it may be bullish or bearish, you don't know until it breaks in either direction. Since the monthly trend is down, downside is more probable.

My target for the down move this month is 1180 because it stands in the middle of the range. Will allow gold to retrace to 1300 before selling more


Note: I use closing price for all lines except the highest one, median lines (dashed) are allowed to traspass closing price