Sunday, July 18, 2010

Gold Bearish Divergence Point to Correction

Weekly Chart

  • Class A bearish divergence in weekly MACD and RSI

Daily Charts
  • Indicators on daily charts confirm internal weakness and downward price trend

  • MACD(50,200,1) slope is negative
    • Note the bearish divergence

  • momentum indicators are confirming downtrend

  • volume indicators are also bearish

  • NOTE: The ADX line is moving up and has crossed over the lower line
    • this usually indicates a strong trend move is about to start
It appears that the long awaited Gold correction has begun which coincides with a wave 5 completion. The retracement target is into the wave 4 formation, which aligns quite nicely with the Fibonacci retracement levels - see the weekly chart above. 

Recommended Strategy: wait for a bullish divergence on the weekly chart before going long.

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