Technical Analysis On Gold: $980 Then Pullback? ~ market folly

Thursday, July 23, 2009

Technical Analysis On Gold: $980 Then Pullback?

Adam Hewison over at MarketClub just put another free technical analysis video on gold that touches on possible cyclical patterns in gold on a monthly basis. He thinks gold will head higher until $980 or so where we'll see some resistance. In the diagram he points out a somewhat of a rounded stair-stepping pattern where gold will rally and then pullback, and then rally higher. So, while gold may be headed slightly higher, it will indeed face some resistance once it hits that $980 level and Adam thinks that could hit here soon in August. You can watch the video here.

While Adam has looked at the spot price of gold on his charts, retail traders/investors can play it via SPDR Gold Trust (GLD) or Comex Gold (IAU). We keep covering gold on the blog simply because we've seen quite a confluence of smart minds in the gold trade as numerous hedge fund managers are invested in the precious metal. While many of them use GLD as their vehicle (namely John Paulson), David Einhorn's Greenlight Capital recently switched to storing physical gold due to it being cheaper to store than the expense ratios they were paying with GLD. It will be interesting to see if other managers switch to physical gold as well. For people who don't have that option, we'd recommend playing GLD as it is the most liquid option in the markets. For more on technical analysis and charts, make sure to hit up our recommended reading list: technical analysis edition.

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