Gold Market Outlook 081008 - Extremely Wide Trading Range

Dear Friends,

The charts presented here are reproduced at the courtesy and copyright of Stockcharts.Com. Please visit the website http://stockcharts.com if you wish to check out any charts yourself. Jon Murphy is one of top technical analysis guru in the world.

This is the Gold Market Daily Chart . This Chart provides us with a strategic bird's eyeview of what has happened in the last two years.

Gold has had a fantastic bull run to a historical high of US$1033.90 per ounce. It then went into a steep decline from February to May 2008. After this decline, it managed to scale to another high of US$988.60 which is significant because it was lower than the historical high. This was followed by a crash below its SMA200 to a low of US$739.80.

Since then, i.e. from September 2008, it has been making a gallant attempt to resume its uptrend. Critical to Gold Market convincing investors that its long term uptrend has not ended is the need for its price to maintain above its SMA200. Right now, the battle between the bulls and the bears continue with no clear winner.

The Chart below is the same Daily Chart, but zoomed in with more details as it is only showing one year of data. The critical Resistance Level is at US$926. There have been numerous attempts to breach this Resistance Zone, but so far, the price has not been able to even maintain a daily close near this level.

Chart produced courtesy and copyright of Stockcharts.Com. Please visit their website at http://stockcharts.com.

We can see this happening again for the 8th October 2008 close where price climbed above US$920, only to fall back quite sharply once more.

The close is the top of the candle's body if it is a white candle, while it is the bottom of the body if it is a red candle.

The good news for the bulls is that Price did close above the SMA200 (Price for SMA200 is about US$900), which is an important phenomenon.

If it can maintain such a close above the SMA200 for the next few days, it is likely that the bulls will win in the short term.

The Key Support Level is at US$820, with a reasonable first line defense at US$830. I continue to believe that Gold will thread water sideways in pattern formation mode, in this wide trading range for the Short Term, i.e. in the next 1 to 2 more weeks.

Best wishes,

Ooi

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