The reversal in the 30 Year took has carried out as mentioned in my last post and in doing it so completed the falling wedge pattern. I expect some stability is bond prices as we move forward though I remain bearish on the fundamentals long term. Considering the amount of Federal intervention, I don’t favor the long or the short side of bonds, I can merely forecast price movement, which is an important benchmark for the overall market.
Price completes falling wedge on big intraday range, hollow buying candles follow
Silver yet again bounced off of its 20 Day MA. Continue to watch this trend.
If the price closes below that moving average at any time, then the $32 price target may be off the table and a correction may be in play. The divergences between oscillators and price activity is there, but they don’t mean anything except caution until this trend is broken.
Gold on the other hand has been running into trouble.
I expressed last week that I believe that gold will consolidate in the coming weeks as it did at the end of 2009 before breaking out again. It appears that the trend is supporting my prediction as gold tested resistance again this morning but the price was rejected and the 50 MA is less than a handful of points away. One of these must give and I still believe that it will be the 50 Day MA.
Don’t think for a second that the reversal in bonds isn’t at all related to the slowdown in gold
Be prepared for a correction similar to the one that we had in July where analysts bombarded the news with claims such as “the gold bubble is bursting”. This correction will be followed by a run at $1500 in early months of 2011. Currently support is at $1262 and $1220. I don’t expect the price to break through that first level of support at all so be ready to buy if the price gets close.