Is It Time To Buy Gold? ~ market folly

Thursday, July 22, 2010

Is It Time To Buy Gold?

MarketClub recently took a technical look at gold and given that everyone is talking about the metal, we wanted to highlight their analysis. Pulling up a chart of the precious metal, Adam points out a potential double top at around 1,264 that took place in June. Since then, gold has sold off in a substantial manner, down to 1,179. He then pulls up the fibonacci retracement tool to identify very important levels in gold. Both the 50% retracement and the 61.8% retracement levels are important in the metal and here's why: both reside around previous support levels of 1,157 and 1,132. While gold could still possibly fall below these levels, he looks for those two areas to provide price support.

In their technical analysis video of gold, MarketClub also points out a previous bearish divergence in the MACD as it turned negative while gold still headed higher in May and early June. That divergence provided an early signal as gold began to decline in late June. Adam thinks a divergence to the upside is about to take place and an entry point into a gold long should be coming. Keep in mind, though, that he still feels gold will trade down/sideways in the very near-term. The buy level he is looking for is between 1,132 and 1,157, which implies some further downside. Those levels, coupled with confirming indicators, could provide an excellent entry he feels. Click the video below to watch his analysis on gold:

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