Gold: 19July We are considering shorting the Aug contract on another rejected probe above the falling 21-day moving average.
Support 1558: Rising trend line from 16May low.
1550.6: –2STD below the 21-day moving average.
1532: 30May low.
1529.3: 16May low.
1523.9: Larger picture, horizontal trend line that extends back to the 26Sep lows.
1500: Psychological support
1478.3 to 1462.5: Cluster of lows between 02May & 27June.
1456.8: 38.2% retracement of the Oct 2008- Sep 2011 rally
Resistance: 1586.9: 21-day moving average.
1600: Psychological level.
1608: Falling trend line in place since the $90 drop on 29Feb.
1620.2: +2STD above 21-day moving average
1664: 200-day moving average
Comment: In biblical reference, and as Pete Seeger, and later the Byrds, once sang: “To everything, turn, turn, turn...”
Our Momentum indicator is turning back to positive again, potentially the fifth “flip” since 21June... larger picture, ten times since the end of March with a week of “almost” in late April. Quite a period of instability.
That said, the August contract continues to find stiff resistance at the falling 21-day moving average since falling below early July. Today is developing the fifth rejection of probes above the average.
Our +-2STD Bollinger Bands are still contracting. Watch out for the Volatility spring to uncoil and break out of the two and a half month consolidation. Our noted falling trend line resistance is the upper boundary. Shorter term, a rising trend line from the 16May low (1558) forms the lower boundary. A horizontal trend line going back to last Sep comes in around 1523-1525.
Even larger picture, we remind readers of the giant descending triangle which extends back to the Sep 2011 high (1923.7). The upper boundary currently comes in around 1700. The bounce off our noted support level at the 26Dec low (1523.9) forms our horizontal trend line noted above and the lower boundary of the triangle.
Seasonal Snapshot: All three patterns are in sync for the next month: rising until 20July, then falling until 31July.
Support (continuous): 3.4430: Rising trend line from 22June low.
3.42: 21-day moving average
3.4240: Rising trend line from 22June low (3.2565)
3.27: –2STD below the 21-day moving average has acted as a brake.
3.2380: 04June low
3.2325: 15Dec 2011 low
3.2040: 25Nov 2011 low
3.19: Rising trend line from the June 2010 low (2.7200) through the Oct 2011 lows (299.40)
3.0915: 20Oct 2011 low
3.0500: Target for a break below recent symmetrical triangle formation
2.9940: 03Oct 2011 low
Resistance (continuous): 3.5040: Falling trend line from 03July high.
3.5280: The 38.2% retracement of the Feb to May decline and also clusters around the upper end of a brief consolidation range in late May.
3.5565: 03July high.
3.5750: +2STD above 21-day moving average and 200-day moving average
3.85: Target for break out above recent symmetrical triangle.
Comment: Copper is probing above its recent symmetrical triangle formation. While not “explosive”, Volume is gearing up to be stronger on this move and the day is far from over. A sustained break out ultimately targets 3.85.
A break out below on stronger Volume targets the previous lows (and the –2STD below the 21-day moving average), then ultimately 3.0500.
The fact that our RSI is “middling”, bouncing between the mid 40's and low 60's and the Bollinger Bands have been contracting, speaks to the potential for a large, break out move. Our Volatility measure is rising to high levels.
Seasonal Snapshot: All three patterns rally until the beginning of August.
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