The extended condition of Gold has a trajectory that speaks to more bearish possibilities, and not the bullish ‘hype’ that currently orbits our trading universe. Since these patterns are tricky, one cannot be certain of which direction prices will break-so key will be to follow the dollar.If the dollar breaks its previous swing low, then gold will likely stage a mild advance to the neighborhood of 1815, 1840 max. Anything past that will be given back rather sharply as the metal is ‘overdue’ for a more substantial correction.
Should Gold break down from this ‘up and down’ pattern, then the initiation of a 2 to 3 week corrective phase has begun. I would anticipate the preliminary stage of the move lower to be a quick drop that is followed by a sideways consolidation. Thereafter the metal will stage an upward advance of much greater magnitude than this current one, likely pressing the September of 2011 highs at roughly $2,000 an ounce.
Traders/investors who ‘missed out’ on the August/September multi-month advance might be looking to reposition for what I believe is going to be an extremely lucrative opportunity. One can subscribe to the premium newletter for a detailed description of the expected sequence of events as well as particular points of entry.