We’re not huge fans out old-fashioned trendlines but when a line has been tested and it has held several times, it’s important. That’s the case with the long-term uptrend in gold. The support level proved to be worth watching but it broke today and the outlook for gold is looking increasingly negative for the short-term.

The trendline is from the credit crisis low of $682.41 on Oct. 24 2010 through the November low of that year and a low in January 2010 and March of this year. Gold bounced off this trendline last week but the bounce was shallow and now the market appears to breaking definitively lower.

Today, gold is down $19.50 to $1164.05 per ounce. The next significant level of support is the 200-day moving average at 1148.07. The 200dma hasn’t been breached since January 2009. Further support rests at $1043.

We hate to be short in an uptrend but will look to a $10-20 rally as an opportunity to establish a short position.

We are long gold for the long term. The last time we talked about gold, on May 20 (http://www.fxbeer.com/gold-nearing-buy-zone/) we talked about how it was a great time to add gold longs. We virtually picked the bottom and were pleased to see gold rally to a record high today, gaining $70 from our entry point.

What we weren’t pleased to see was the reaction of the market after we broke the old record of $1,249.17. The market was only able to hold above the high for 30 moments. Two more breaks higher touched just two dollars higher at $1.251.68/oz. Price action then turned sour and retreated to close $13 from the high at $1137.

We are now in a position where we have to decide whether to hang on through a potential correction or take profits. We have no doubt that gold is heading higher in the long term but the reversal today is an unmistakable technical signal. As hard as it is for us, we must head to the sidelines. We don’t see any correction below $1200 materializing but for the next few days we see the potential for profit taking. Hopefully, this allows us to re-establish our position at a more attractive level.

On the other hand, we don’t doubt the ability of gold to rally. The RSI isn’t flashing overbought signals and the case for gold buying remains strong. If we see a close above $1250 in the coming days we will happily give up the early part of that move for the chance to confidently buy into the trend.

The short-term trend in gold has been higher but the medium-term trend is lower. This is complicated because the long-term trend is undoubtably higher.

Everyone has an opinion about where gold prices are going. We look to the charts for answers. At the moment, gold is approaching several resistance levels that converge and will make it very difficult to see further short-term gains.

As we can see, there is downtrend resistance as well as the 50-day moving average at $1,112 and the 100-day moving average at $1097. The rally from $1045 up to $1095 has also put gold in a short-term overbought position. The silver and oil charts are also looking stretched.
We favour selling gold at this point but we would certainly cover (and potentially go long) at $1112.

We have seen large rallies in gold in two of the past three sessions and we are prepared to say that the correction in gold has run its course and that the commodity is ready to resume its rally.

Gold Daily Since Oct.

Gold has rebounded after correcting from the all-time high of $1226 to $1070, which was just over the 38.2% retracement of the move from April to December. The correction was a healthy one, even if many would have liked to see something in the upper 900s before going long once again.

The rally in gold is one of the strongest trends in any market and the signal over two of the past three days has been solid. There is upcoming technical resistance at $1141.52 but if that is breached a re-test of the all time high is the favoured scenario.

Our chart shows the RSI, Bollinger Bands and Slow Stochastics. The RSI is bullish, it has risen to 60 after basing and it won’t be historically overbought until were in the mid-80s. The Bollinger Bands had contracted and now were are pushing against the upper Bol after a correction to the bottom. Look for it to ride the upper Bol like it did in Nov. The Stochastics do give some reason for pause, as we are already looking stretched but overall, the trend looks good.

Fundamentals:  We have a few announcements today which will affect the market.

Coming from U.K we have the “Manufacturing Production”. The previous announcement was 0.4% and the forecast for today is 0.3%. (8:30 GMT).

One more announcement coming from Canada “Building Permits” which will be release at 12:30 GMT. The previous announcement was 1.0% and the forecast for today is 0.5%.

USD/CAD

Let’s start analyzing this fascinating couple, Earlier this week, the cad dollar continuing strengthening, you can clearly see it over a daily chart ,

After falling around 90 pips on the back of the August US unemployment report from 1.0970, USD/CAD has bounced at 1.0885 to previous levels close to 1.0980. Currently the pair is trading around 1.1050 to 1.0650 over a daily chart, it is important to note that there is a strong resistance point at 1.0825 .

this pair is a wonderful pair for scalping  traders , the pair is in  clear range, we can find some opportunities by continuing  to trade with this pair. Let’s translate yesterday movements to money

Resistances-1.0830 – 1.0895

Supports-1.0730 – 1.0680

XAU/USD

One of the most fascinating things in the forex market is the possibility to trade with commodities . Especially the black oil trade , witch so-called gold.
Over the last few days we are in a track we can find a clear volatility coming from this pair.
last time this pair had reached to the same levels as now ,was on th23 February, you can find it over the hourly chart , as we can see the pair tried several times to cross the resistance line, it’s hard to say what will happen, but it certainly seems that this direction is an uptrend.

Resistances -1030

Supports -990