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Gold Analysis

Trading gold

Gold Charts

Resistance

1225-1275

1183-1206

1163-1183

1125-1145

Support

1040-1060

1008-1022

980-990

965-975

958-960

Key support is the major breakout area of 970-1030 area.

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Daily Update / Precious Metals Market

Long term trend = Bullish -- Resistance 1300-1500 Support 830-900 & 650. (gold bugs) - Our best take for the 2010 lows will be March/April or July/August.

Medium Term Trend = Neutral at 1130 2/22/10 (Price in the middle of a 4 month range) - Resistance is 1163-1183 and 1133-1147 SUPPORT 980-1030 and 933-950 (investors)

Short term Trend = Neutral to BULLISH above 1130-1135 - 3/10/10 . Goes to bearish below 1080.

Resistance is 1147-1163 (traders) Support 1099-1106

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The opinion expressed in these reports are the conclusions of the author. The information provided was researched carefully, but we cannot guarantee its total accuracy. The report is published for general information and does not address or have purpose or regard to advise specific investments to anyone in the general public. Rather it provides an individual’s perspective of such markets. Its content does not recommend any specific investment advice to anyone nor should there be any inferred.

Gold March 9th 8 PM EST USA TIME

Coming into Tuesday's session the odds favored lower. Price was sideways all day up until the COMEX session in New York where a sell off began supposedly because China said they still thought the price was too high for them to be purchasing at this point. As Trader Dan commented, anyone who believes that China telegraphs their moves is not thinking correctly. In any event, the New York session broke down early and at one point gold was down over 15 dollars per ounce before it staged it's recovery.

Yesterdays update listed support at 1106-1115 in Gold. The low for the session was 1107.20, just one dollar from the lower range number. Resistance was listed at the 1144-1148, but minor resistance listed 1126-1128. The high for the day was 1124.50

Today's drop and subsequent REVERSAL back up is very important short term HOLD for gold. If you will recall, we've used 1110 as a key area for many weeks now and it keeps popping up in support, and the fact that we held there today was a good thing for the bulls.

Let's look at the 60 min chart to see what's going on:

First and most important is the red dashed downtrend line which provided support since the 3/3 high on pullbacks was finally penetrated to the downside and that is where today's break occurred. This break however was reversed right back up and price rallied to a small horizontal aqua resistance line that I've drawn at the 1125-1126 dollar area. Those of you who receive the daily intra day email I send out have been aware of this area since yesterday's update and we can see how price has so far kept bouncing off of that area. One of the issues we discussed last night was that a drop below the 1110-1118 area would add to the short term bearish case. The 1110 penetration today lasted only 2 minutes and within an hour price had returned to right around the 1118 area. You can see the peak today was at the tiny aqua moving average, and the subsequent pullback came back to the dashed red line on the close. The red line that price has been bouncing off of all week has been on our 60 minute chart since February 10th and can be viewed on a number of charts if you scroll down. It's amazing how it now comes into play 30 days later. This is a RESISTANCE FAN line and is available with many chart programs.

Pattern: So far the pullback from the highs has been corrective and it suggests that this pullback (so far) is not the beginning of another LEG down. However if we were to break below the lows of Tuesday it certainly could morph into an impulsive (versus corrective) pattern. In other words it could become the same type of pattern as we saw in December. I do not favor that outcome but I have not taken it off my radar for one reason. The rally back up to this area can still be classified as a medium term bounce. The sell off from the December high to the low and the SUBSEQUENT bounce since then can still be classified as a pattern that has one more leg down before it completes. So it is the medium time frame that still has the door open to that possibility of lower price. The seasonal aspect also adds to the caution as this is the latter stage of this cycle, and KEY lows do have a tendency to end in a dramatic fashion.

Cycles: Our beginning of the month rally transpired right on time, but this subsequent pullback (should it continue) might be SUGGESTING a mid month low instead of a peak. The beginning of the month rally this time did not last very long in time, but did produce a 60 dollar rally from bottom to peak.

For now, today's reversal back up keeps hopes alive that this is just a short term pullback. The short term trend remains neutral ---and even though you've seen it in neutral mode a lot recently, we can see that the 1120-1125 area has been the main AVERAGE price point now since the 5th of February. As aggravating as a neutral position is, price has confirmed that position as valid. IT SHOULD be coming to a close soon. There are really only 4-5 GOOD trades per year. Last September, when the gold bull re-emerged, we stayed in BULLISH MODE thru out the entire run up. These past few months have been the opposite. Stick around......it will change again.

You will notice a small red line below the 2/25/10 low and one below today's low. From a SWING TRADE perspective this is where my trade stop for this rally has been brought up to after today action (from the last low point on 2/25 to below today's.)

Could we get a MID MONTH LOW INSTEAD OF A HIGH ???? Yes, we certainly could. A mid month low would lead to an end of month high........OR -------- A STEEP FALL. If this cycle inverts to a low mid month low and decides it wants to go LOWER still.........odds will favor that it is steep. But let's worry about that next week or when price breaks and brings that potential to the fore front. Because if it rallies to the end of month, the move up could also be steep. THE IDEAL TIME FOR A CHANGE in trend is the March 14-18 area. This subsequent pullback in mid month just might be setting up for a key SPRING LOW.

Moving average: The moving averages continue to be in bullish mode. We discussed earlier this week that they have turned positive for the first time since the December high. We also discuss that price could certainly come down to test these averages and today's low was only 3 dollars from the slow red moving average before price reversed higher.

Debt Bomb : While doubt that price was affected by the China comment that the price of gold is too high for them to purchase right now, they will be buying all the gold they can. This is just posturing on their part.

The fact that Greece is in the USA now pleading their case and that I noticed the media is beginning to mention SPAIN now in their commentary leaves me slightly on guard. The premise I've been focused on is that the only the thing at this point that could bring gold down is a debt bomb. That is the only way the Elliot Wavers would ever get their big "gold " drop (my opinion and no disrespect meant). Ironically, Silver, GDX, and HUI have a chart pattern where I can see why they feel that way (choppy and overlapping), but the gold chart to me is not one that has this pattern. For now, I'm keeping an eye on the situation. IF THERE WAS A COLLAPSE I think it would be very short and that gold would EMERGE from the ashes as the leader. Those who have read my stuff for a long time know that I have advocated that scenario for a long time. The proof of the pudding came in 2008 when we did crash and gold has by far come out and established itself as the leader. The possibility of gold being the only asset that does not go down during the upcoming crisis is also a very valid consideration. The last one had all asset classes except the dollar and bonds go down. If we see gold detach on this upcoming one, all the better. But let's make sure. We are after all in uncharted territory. The most likely time for a low this year is July/August, or Oct/November. Not that it will, but that's what the odds favor. We must keep that in mind and proceed cautiously.

Seasonal:

The seasonal pattern usually has an early March bounce.........a mid month low and an end of month rally. From that perspective, gold is acting exactly like it should with this pullback. The point to keep in mind is short term versus medium term investment. Medium Term PRICE LOWS are most OFTEN seen during the North American summer -- NOT THE WINTER. The fact that gold stocks pulled back 30% at their lows in February however does leave room for price appreciation. If the Seasonal is playing out.........WE SHOULD SEE SOME TYPE OF RALLY forming in the not too distant future. ODDS favor some type of rally in March or early April to begin and and last into the May or June timeframe. In other words --- ODDS FAVOR THAT THE PULLBACK FROM DECEMBER is coming to an end soon. I'm not saying that we won't make new lows. I am talking from a "TIME" perspective. The rally could be choppy also. Its the time perspective I am addressing.

What Next ?

Was today a key reversal day? It certainly looks like it. We must remain cautious just the same here too....and here's why. Since the pullback began last week from 1147, there has been four sell spikes lower on the 60 minute chart. Each one has REVERSED but only to fall prey to another push lower some 24 hours later. If you go back to the peak you can see the spikes where price reverses up for about 24 hours, makes another peak and then spikes down to the next level. We're it not for this observation, I would most likely view today as a key reversal day. A lot of my analysis is based on what the market IS doing. Since each reversal in this pattern has done this, we need to keep in the back of our minds that this one could be taken out also. The good news is this reversal did look a bit more significant than the others, and it OCCURRED at a KEY SUPPORT area of price. That's why I think the odds favor it (slightly) as a potential low for the week. Because of the action this week, it must remain a caveat because if the pattern continues to do what it has done week to date, we will get a 24 hour push/bounce and then gold will try and challenge the low price area again. Tomorrow favors range bound trading. 1115-1130 area.

Could the BANKS be trying to sell some positions before the CFTC and lower the short open interest ? I believe that is what the case is. I also suspect the drop to 1044 and 14.70 in silver during February was also bank instigated. These people are interested in lower prices so they might be able to cover their short positions on a sell off. Indeed, there was a good reduction during the sell off to the February lows.

Support for Wednesday is the 1110-1112 area initially and the 1104-1107 area. In the event of a significant drop (not expecting it just mentioning it) KEY IS THE LOWS OF FEB 25th at the 1088 area. ANY MOVE BELOW 1080 would do a good deal of short term damage. For now, lets not worry about that. TODAY'S low is what we want to focus on. The reaction off that low is very constructive. KEY NOW IS FOR GOLD TO MOVE ABOVE minor resistance at 1126-1128 and then 1135-1140. That is the key upside resistance to watch for on Wednesday.

Bottom line:

Today's low has a chance of being THE low for the week, but the caveat is that we've had 4 spikes since the 3rd of March that have not held. KEY IS HOLDING 1110-1116 on WEDNESDAY or worse case 1104-1108.. ANY MOVE BELOW 1100-1104 would ADD significant short term pressure. PREFERABLY if this is a reversal day, gold has no business going below 1110-1112.

Odds favor a Test resistance day in a range of 1130-1135 area for Wednesday. Gold is not out of the woods just yet on this pullback, but the action Tuesday was very constructive. Since we are at the depths of the seasonal time of weakness I am trying to be as cautious as I can. While I am not out of the box as quick as other analysts, I don't have (up until now) as many misses when I call for a trend change. There is a time to be aggressive and a time to be cautious. Those who read my updates during the big autumn rally will recall I did not ONCE give the BEARISH trend signal until the December top. Now, that was a function of market price action and my ability to stay with it. Here, we don't have a STRONG DEFINED uptrend, we have a neutral market and rather than call a bottom every time there is a 40 -70 dollar bounce I am trying to let the MARKET tell us the correction is over. So I am trying to mirror what the PRICE is telling us about the market. Right now..........IT TOO is indecisive as the neutral range confirms. While hearing the "bottom" is in is exciting, but we don't want to claim it every week.....and we WANT price to confirm as much as possible. Now that doesn't mean you don't hold gold stocks or gold itself, but for me, I am usually lighter in stocks in Feb/March than i am going into September/October.

Lets see what mid week Wednesday will bring. We have our parameters, now it's up to gold. For those who think the bottom was today and are short term oriented, playing it requires a stop somewhere. The safest (and most expensive) would be the 1098-1101 area, putting it about 8 dollars below today's low.

The gold stocks (GDX especially) also point to a KEY AREA here kind of like make it or break it short term. GDX must get above 47-48 or could face a pullback also. HUI is sitting at a somewhat important 420 area. If you look at the Gold Stocks button, although HUI has not broken its channel, the RED moving AVERAGE is still above the blue and that tilts the ODDS that this rally will fold UNLESS the blue line moves above the red.

IF GOLD can climb back above 1135 --- that will add to the short term bullish case. If we pullback and hold 1110-1115, and start rallying back towards 1130, that will also add to the short term bullish case.

BOTTOM LINE: THAT REVERSAL BAR looked pretty good.......odds are with the bulls on Wednesday. Watch the 1032-1035 area.......getting above that might spark some interest and lead us to a mid month high. PULLBACKS TO 1116-1118

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Gold March 9th 1:15 AM EST USA TIME

In yesterday's update I stated that it comes down to whether gold is just hanging around here waiting to fail at this area. I did suggest however that it usually does resolve higher and that was not in the cards or the odds today. But I also followed with "SO THE PRICE ZONE IS CONTAINED to this battle ground." There was even suggestion that a key area like this could have gold pulling back to the fast yellow or even the slow red moving average.

Support was listed at 1110-1118 and the low of the day was 1118.20. Resistance was 1144-1148, but the highest gold got was 1138.30. Listed was that the real test for gold would be above the 1140 area. Wrong we were however that the odds favored the bulls on Monday.

What next ? Moves below the 1110-1115 short term will add to the bearish case that a gold pullback is in full force. price is arriving at the lower end of the channel line and a break could add more downside pressure.

Resistance is the 1140-1147 area and now minor at 1126-1128 and 1140-1144. Support is the 1106-1115 area followed by 1080 to 1088.

Bottom line: Any way you slice and dice.........we are in a neutral to bearish range. We discussed that the winter seasonal aspects of gold can make it choppy in this time period. Barring a bounce the odds favor lower.

Gold March 8th 1:30 AM EST USA TIME

The weekly gold button is also updated.

Monday comes in right at the 1135 area in gold at the battle for control short term is right at the price point of battle. As you can see by the highlighted area, this 1130 -1140 area is in a spiking up and down mode.

Support 1110-1118 and minor at 1124-1126.

Resistance is the 1144-1148 and 1163-1183.

For Monday it comes down to whether gold is just hanging around here waiting to fail at this area. Past experience favors higher when price just hangs around a major short term resistance area. Not to say we can't pullback from here. You can see the violent SPIKES at 1140 where the bears are trying to contain gold and the spikes when gold traded near 1128. SO THE PRICE ZONE IS CONTAINED to this battle ground. While the outcome here is not yet decided, all moving averages are now in an uptrend for the first time in a while on the 60 minute. A key area like this certainly can have gold do some lower testing of the fast yellow or the red downtrend line near 1120. We can see that tiny blue and purple are together right with price and right at 1135. Because of the pattern it would seem that the bulls still have control, but the real TEST is above 1140. A move above last weeks high by more than a few dollars should confirm a move to the 1160-1183 area.

What next ? The battle for control at 1135-1145. We've been chopping there for a few days and the next short term trend should be ready to make its move.

Bottom line: There is additional content on the weekly button. From this chart below, our perspective the bulls still seem to be in charge and odds favor them on Monday. They will try and push gold towards 1140 again on Monday. A failure on this next push to this area would have us looking at a pullback. Until that time, odds favor the bulls on Monday.

Above 1140-1145 should be bullish and a move below 1110-1115 would suggest potential bearishness.

WATCH THE 1130-1140 AREA AS KEY this week. ODDS FAVOR bulls to run to resistance. If they can control there, 1163-1183 would be next. If they can't we'll look for support on pullbacks.

Gold March 4th 8:30 PM EST USA TIME

16 hours ago our bottom line in the last daily update was:

The uptrend is still bullish but we will exercise caution near this area. Look for gold to potentially go sideways to lower into the job report on Friday.

Indeed gold did pullback today from the highs established at 1146 and pulled back all the way down to 1126 and is currently sitting right in neutral ground at 1130 as if it was awaiting the unemployment data. From a technical perspective, if you look closely at the last few days on the bar, you can see the new high that was established above the Feb highs from 2/17 - 2/21. The we attempted a second thrust which failed above 1140. This created a mini head and shoulder pattern from which price gave way on. But really, gold so far has just pulled back to test support as witnessed by the tiny purple moving average and the subsequent price is now sitting at the 1030 area leaving all in suspense. Recall the arrows we drew earlier this week on one of the daily charts. Lets hone in on the closest one. Here too we can see the test and subsequent failure. It was interesting how it took place right at the mid channel dotted line.

This action has prompted some Analysts to call for a short term peak and suggested to taking profits on positions bought last week. And indeed short term traders should take some off the table or liquidate all together. THAT'S if your a short term trader. We must know our time horizons. A swing trader might have a stop lower depending on his entry. The bigger question is could this be a top ? Let's discuss the short term aspects.

What is the trend ?

While I won't argue that it could be a short term top, that is different than saying the short term trend is bearish. Calling a short term top is a TIMING call. From a short term trend perspective it is important to note that the FAST Yellow, and the MEDIUM Green Moving Averages have stopped moving lower and have ALL CROSSED and are in bullish formation. This is on an hourly basis. I mention that because of timeframes. If your a short term trader you might be looking at a shorter time frame to enter. For instance, on Feb 9th we published this tick chart. It was 20 dollars and 72 hours from the low. Notice how the moving averages on this timeframe had already turned up below.

As you can see by this chart, price can and does at times return to the green and red moving averages before moving forward. The point I'm making is that the hourly chart above could certainly have price return to it's respective area and test the green and red moving averages. That would mean that price could still return to the 1100 area as part of the overall short term trend. You see, as price increases in gold we are going to have to put up with wider and wider PRICE RANGES but are in reality pretty much the same percentage moves as when gold was 500. It's just that its twice as wide now.

So the bottom line to the trend is that for the moment, the moving averages show that at least for now, gold has stopped DOWN TRENDING and is in the midst of trying to develop a BOTTOM and to turn the trend up on 6 different levels of time (all of the short term). I know a lot of readers what more longer term stuff. And if you go to the medium term button right now you'll see that the medium to long term perspective is there and is updated. I will attempt to update it once or twice a month. Same with the gold stocks. They will be updated more often.

What next ?

The unemployment numbers come out tomorrow morning. Now if we think about for a moment we can surmise that a lagging indicator that is so manipulated by the Government has absolutely NOTHING TO DO WITH GOLD. Rather it is a tactic that the boyz used to harp on together and short gold lower week after week over the past year. That doesn't work as well as it used to. The reality is that the markets are heavily manipulated and the boyz at the controls know what a head and shoulder look like and have the money to create one if they so wish on the short term.

Initial Support is the 1119-1125 area and daily is at the 1103-1110 area. Weekly lies at 1080-1090.

Cycles

With an end of month low and subsequent rally there are cyclical forces that argue for a mid month LOW and the seasonal weakness through the month of March. But we've discussed and shown that the potential for a bottom is also significant. Interestingly, I've discussed the 1130 area as the KEY TURN or PIVOT point if you will where the bull and bear battle is in this timeframe. And tonight price is at 1130. This 1130 area has been showing up since January 14th. We've basically rallied 100 dollars off the lows and we are arriving at the 30th day. This is yet another issue that argues for a pullback.

DEBT BOMB

As I've said over and over -- there is only one thing that scares me. DEBT BOMB. I've discussed consumer, corporate and NATIONAL insolvency. Every time there's a scare gold plummets. (Even Dubai was a very sharp drop.) Do you know that the Dubai low and the FEB LOW are at the same price area.....1040.

Lets pay careful attention to Greece.........as the rest of the world is lined up behind them. What will be interesting is if they decide to not BAIL OUT GREECE and NOT TURN THE PRINTING PRESS ON. How's Iceland doing? Did anyone bail them out ? For the EU --- if they bail Greece the political ramifications are Huge.

I suspect things should remain rather range bound in gold until tomorrow's report in the 1143-1126 area.

Bottom line:

The trend is up and gold is at the 1130 area. In sum we are still within the confines of the medium term range and for now, the trend is still up in gold. WATCH THE DOTTED line in the middle of the channel. That is also a key turn point area.

The short term ..........AND THE MEDIUM TERM is neutral at 1130 as we've been discussing. Let's see how gold handles itself on Friday. Odds favor choppy sideways range bound stuff and a possible bounce later on the day Friday. Over all --- THE SHORT TERM TECHNICAL TREND IS STILL UP but lets be cautious as the MEDIUM TERM IS STILL NEUTRAL in price. It comes down to what gold does in the 1130-1147 area. Maybe gold is saying it for next week ?

Gold March 4th 12:01 AM EST USA TIME

In our last update we pegged resistance at the 1140-1147 and the high came in at 1146. Initial support was listed at 1129-1132 and the low came in at 1135. We favored a new high for the week, but a consolidation pattern. If we look at the chart the last 24 hours pretty much acted in that manner. Let's go right to the 60 minute chart.

Once again gold has rallied into a new month after making an end of month low. This is a pattern that has been going on since last September. The legendary W.D. Gann said if you want to know what price is going to do look at the past and that is one of the things I am always on the lookout for and it is very helpful in my analysis. The low came in right near the end of February and a 60 dollar rally has ensued.

We can see that today's price rallied above the last three peaks and bested February's highs. Now is the time that gold could be vulnerable for a pullback. So far the 1135 area (old resistance) has pretty much held the pullback. This area is where we need to be careful. We still favor higher prices, but the potential for the HIGH of the week being in place is certainly a consideration here. The unemployment data out Friday gives gold a good reason to pullback into Friday morning.

A channel has finally formed for us to measure the progress of the rally. We can see a dotted center line within the channel as well.

Support lies at the 1115-1124 area followed by the 1104-1110 area with minor support at the 1129-1132 area. Resistance is the 1147-1158 area for Thursday with minor resistance at 1143. Should gold exceed the 1150-1168 area the potential to rally to the upper channel line remains a potential.

What next ?

We would expect gold to experience a mild pullback into early Friday am. However, this should not be taken as a definite. Its she most likely event so we'll have to see how it plays out. THE KEY is that gold has broken above last months highs. So what it does here is most important.

Bottom line:

The uptrend is still bullish but we will exercise caution near this area. Look for gold to potentially go sideways to lower into the job report on Friday. There seems to be a lot of underlying strength so Time will tell.

Barring a correction the uptrend remains intact. Odds favor range bound trading on Friday. Should gold sell off in when the numbers come out it will be key to watch the action in the later part of the COMEX session.

Gold March 3rd 12:01 AM EST USA TIME

In last nights update I discussed my cautiousness but also the bullish aspects of the short term charts. We discussed the bullish “head and shoulder pattern", and the moving averages crossing. Coupled with the on-going beginning of month rallies in this bull market since September, the bottom line of yesterdays report read: “Tuesday seems to be the prime day if gold is to extend higher this week to begin from…….it seems that the odds go to the bulls for short term direction. “

Resistance listed for Tuesday was 1130-1135 (We listed 1137 on the intraday email update) and the high came in at 1138. Support was listed at 1107-1112 and we suggested that 1117 was where the bull/bear tug would probably transpire. The low came in at 1115.

We can see that price has move slightly above the February highs of 2/17 and 2/21. This is a very important characteristic but it is also the most vulnerable point of a rally. This is the most critical spot of the week and it would not be out of the ordinary if gold were to spend a day or so here. The best gauge of that is the aqua channel line where price is bouncing off of right now. That line seems to be providing at least initial resistance. But if gold is to fail and begin to move lower again this would be the most likely place of reversal. Odds still favor higher at this point........but a pullback to support might be in order first.

Support is the 1122-1128 area initially, followed by the 1109-1115 AREA and a minor support at 1119-1120. Weekly support is the 1080-1090 area. Swing trade stops could be employed at the 1100-1105 area.

The chart below shows that the 1140-1147 area initially will be resistance on Wednesday. The lowest arrow is the 50% retracement of the correction (1135)and the middle arrow the 61% RETRACE (1158). Thus resistance for Wednesday is 1140-1147 zone as well as the 1158-1168.

WHAT NEXT ?

Odds favor a pullback to the 1125-1129 area and a retry at resistance again on Wednesday. This is such an important area and the BANKS know that any moves much higher would trigger new buying and more short covering. Thus I would suspect they will be selling and trying to contain a breakout here. The Fibonacci 61% level is the 1158 area and the 50% at the 1138 ish area. These are key prices to watch this week.

We should not be surprised if Wednesday is a transition day where we might make a new high in at the 1143 area but we suspect the day could be choppy and consolidation will rule. Gold is up almost 50 dollars since Thursday so a bit of consolidation here is possible, but not mandatory. Bottom line: The short term cycles are up, the moving averages are positive, gold tested key support last week and rallied hard out of there. IF GOLD IS TO FAIL --- and actually begin a down move, It should happen right in this area.

However, we DON’T think the ODDS FAVOR THAT just yet. We just want to keep in in mind as March is a tricky month in the metals.

We are already in mid week, so a potential high point and pullback into Friday morning could develop. But we should not EXPECT it, we’ll take it if it comes.

Bottom line: The bulls are still in charge. Because price is just above the February highs, be very careful at this area. Cycles, patterns, and technical indicators are in gear ----------- BUT THE BIG BOYS should try and stop the action near here this week. Unemployment Friday (thx Greg) suggests that we could see consolidation into Friday morning. So we view Wednesday as a transition day with a potential new high but a lot of backing and filling and choppy action. Pullbacks aside, the short term trend is up above 1140. There are cycles that suggest a short term peak is possible, but for now, the odds favor higher. Wednesday and/or Thursday should provide a peak from which a gold pullback into Friday morning develops for another potential Turnaround Friday day.

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Gold March 1st 8 PM EST USA TIME

In yesterday's update the chart suggested the key price range for Monday would be the 1121-1126 area in April Gold. The high for the day was the 1122.30 and occurring just as the London session got under way. Support was detailed at 1105-1110 and price got down to the 1113 area but no lower. In our out look we stated " Odds favor a test above 1120 but gold might need another day to consolidate before attempting to bust above 1130-1135."

While the price targets and outlook was correct we did expect a bit more bullishness that what we saw. If you were on the New York side of the trade all you really saw for the day was sideways action between 1113 and 1121.

The key question on Monday evening is whether gold made an early month low as is ready to power up to mid month? Lets look at the daily chart first.

As you can see buy he chart, gold remains within the confines of its triangle formation and is once again testing the upper boundaries of the orange downtrend line. Price has been coiling in this pattern now for just about 90 days and the triangle should be resolved rather soon. The APEX of the triangle extends out to April so there is a distinct potential for gold to continue in this pattern for a while longer. I'll be very surprised if it extends much longer, but it does STILL remain as a potential pattern we should be on the watch for. Should gold remain sideways for the week we certainly will know why. On the other hand, should gold race above the 1130 area, we will know that the downtrend line has been exceeded and odds will favor a rally to the 1160-1183 area. On the downside it would be a break of the lower trend line.

What next ?

Let's zoom in and take a look at the hourly chart. Since 2/22/10 the short term trend has been categorized as neutral and thus far a week later that situation remains. But as you can see, the next move is about to begin. Gold is about to move to either 1130-1140 area or the 1100-1105 area.

From a short term cycle perspective, price bottomed one day from month end and the beginning of a new uptrend is early in its infancy and has retraced 30 dollars from the bottom. The struggle with the analysis is really whether the strong seasonal factors (which do suggest weakness) is already at an end. The situation with the Euro and now the British Pound keeps the US Dollar index in an uptrend and both of those issues keeps me cautious. But there are also bullish aspects as well (scroll down)

This rather busy 60 minute chart shows a potential inverse head and shoulder pattern and that has bullish implications should last weeks low hold. The pullback from last week filled the price gap at 1095 and has since rallied. Therefore everything about the pattern so far since the lows still exhibits the potential to move higher. The green (medium) moving average is right with the (Slow) red average and looks like it's crossing above it (another potential bullish event).

Support is the 1080-1090 on a weekly basis, but initially we can see support in the 1107-1112 area. The 1097 to 1101 area where the green and red moving averages reside is another area that could provide support. And finally, the above chart shows THAT THIS 1117 AREA is BASICALLY the key price area where the BULL/BEAR very short term decision point will transpire. As long as price is in the uptrend channel odds favor higher prices over the short term.

Resistance is the 1130-1135 area followed by the 1157-1183 area.

BOTTOM LINE:

Reader Greg reminded me about the unemployment report that is out this Friday for the USA and how that might begin to put a drag on price after mid week. Elliot Wavers are watching the 16.75-17.10 area as a retracement. If we are to move higher, that price point needs to be taken out. That would be additional evidence that we are going to move higher short term.

In summary, we are still in neutral ground, and while price can still come down and visit the 1100-1105 area, it seems that the odds go to the bulls for short term direction.

WATCH the 1121-1125 area again on TUESDAY. That is the MUST MOVE ABOVE AREA to extend the rally. As long as we are below that area, we need to remain cautious as downside testing to support will be in play. With that said, Tuesday seems to be the prime day if gold is to extend higher this week to begin from. Until the short term cycles and patterns clear up, we'll remain neutral with a bias to higher price but willing to concede our neutrality. Neutral is a position just like long and short. If that inverted head and shoulder is valid, the bulls might get a nice ride this week.

================================

Gold March 1st 1:16 AM EST USA TIME

On Friday the outlook was for a higher price in our Turnaround Friday scenario and gold did not disappoint. It seems that the mid month pullback was short lasting only 4-5 days. Now we are at the beginning of the month and the potential for gold to climb higher the first part of the week is favored if gold can get above 11121-1126. That is where first minor resistance is seen and this area might provide the highs for Monday. The most important chart formation for the week was the circled head and shoulder that occurred in January. We can see the pullback it elicited, but what is more important is how price has now returned to the 1120-1130 area on five occasions. This time we would expect price to bust thru higher. Thus for Monday the 1121-1126 area is key. Should gold take out the February highs, a rally to 1163 to 1183 will have potential.

Support is the 1105 area initially and we have daily at 1080-1090 and weekly at 1140-1160.

What next ?

Cycles favor this week as higher price for at least the beginning of the week. but we do recognize that we are in a trading range. Monday should be a day where gold attempts to get thru resistance at 1121-1125.

Support is the 1105-1110 area on Monday. Odds favor a test above 1120 but gold might need another day to consolidate before attempting to bust above 1130-1135.

We will do a weekly update with chart for Monday evening.

BOTTOM LINE: Watch the action at 1121-1126 on Monday and support should be 1105-1110. Odds favor higher on Monday......at least into the 1120's somewhere.

===================

Gold February 25 12:01 AM EST USA TIME

Yesterday's update showed a chart with red arrows where price had to break in order to turn the short term bearish. Price got right there.......at 1088 and traded in a very tight and choppy range until 11am EST New York time. With stocks, grains, and oil down heavy, gold started to climb and it kept climbing throughout the day. Resistance listed the 1100-1104 and 1110-1115. The high was 1109.90 just a dime shy of 1110. The question we were already asking this morning was whether gold actually disconnected from the other markets. It's something to watch carefully going forward. Gold stocks also reversed higher. Lets take a look where we are on the chart.

Tonight's daily view shows best the large triangle that price has been trading in. From a medium term perspective, price remains neutral as gold works it way thru the pattern. With the seasonal lows due in this time frame and the US Dollar rally, gold has done rather well. Today all of a sudden the IMF has buyers for the gold (no kidding) and Greece is going to get a bailout (no kidding).

What next ?

For those who asked about live charts 24 hours per day and free, here's the link.

http://www.dailyfx.com/charts/netdaniachart/

A zoon in here shows the 1090 area and how it held over the past 48 hours. The subsequent rally back to the 1110 area shows a pattern that look like it wants to go higher. Will gold give us another turnaround Friday ? After dropping for the majority of the week, last nights update highlighted the potential for a bounce and it certainly could extend further.

Resistance is the 1110-1115 & 1120-1130 area. In sum it looks like a short term low might have been made. Support is the 1080-1090 area.

Gold is spending a lot of time just under 1110.........and that usually means higher.

Bottom line: Today's action keeps the short term trend alive. As long as we remain above the lows from Thursday price will favor up. Lets see if turnaround Friday can possibly happen one more time. (its due to be wrong at some point.) a break above the area below will suggest we go test 1120 or higher. Odds favor higher on Friday. We will review the seasonal again this weekend.

Gold February 24 12:55 AM EST USA TIME

In yesterdays update :

For now, we will favor the downside until the highs at 1130 get taken out. Resistance - 1109-1117 and 1130-1135.

Watch 1090-1095 tomorrow and 1082 on the downside ......

As you can see, gold spent the better part of the day at that 1095 area. The blue down trending line is the next set of support at around 1075-1080 if we break from this current area. Price has been at the RED AND GREEN moving averages just above and below as both averages are converging RIGHT where price is. The medium green is trying to cross above the slow red which could would help the uptrend's case, but not necessarily for tomorrow. The first smaller arrow shows the gap that we discussed in earlier reports when gold was near 1130 as one of the possible pullback areas. Gold has spent the last 24 hours here at this gap and that's not usually the sign of bullish action.

The second longer arrow shows the next support area at the 1075-1080 area.

What Next ?

Cycles - area still pointing down into month end. As long as gold is not above the 1130-1135 area, the odds favor a March low of sorts.

From a price pattern, these arrows are key to the short term. Below them would turn the short term trend in bear mode. EVEN BREAKING BELOW THE RED MOVING AVERAGE here does a lot of technical short term damage to the chart and is a short term red flag.

In order to neutralize the downtrend, gold must climb back above the 1110-1115 area and then 1130.

We discussed in yesterday's update that gold would be fighting to stabilize itself at this 1090-1095 zone. Thursday could provide similar conditions. Price has been dropping since the open on Monday and we should expect some type of bounce. Or will gold wait until turnaround Friday again?

Bottom line

Resistance is 1100-1104 & 1110-1115. Support is 1075-1080 followed by 1058-1063. Barring bounces the short term trend is down. Odds favor a test of next support. Because of seasonal conditions and weakness potential, gold is vulnerable in this timeframe.

=================

Gold February 23 11 PM EST USA TIME

The Sunday evening update had the short term trend come out of bullish mode at 1130 after three attempts to penetrate that key price area. The chop and circumstance of gold is at its highest in a while. The chart below shows the swings as the bull / bear fight for the short term is on. Thus far weekly resistance has held but so has the downside trading range at the 1090-1095 area. We can see tonight that price once again returned to where the gap is on the chart. Each sell off has halted just above that area and the Red moving average. A key factor is that the medium green moving average line has joined the red line at the 1095 area. Price lingers just above it.

Resistance - 1109-1117 and 1130-1135.

Support - 1080-1095 and 1058-1063.

Cycles - The mid month peak looks to be in place. Seasonal chart points lower as we've discussed in previous daily updates. However, until the lower support gives way we can't be certain. Yes, we could choose direction, but then we'd be subject to having to waffle as some of the analysts who also report on gold. Nothing personal either as it is a difficult market to put a handle on as the price action of the last 9 days show.

The weight of the evidence suggests that lower is the odds favorite but we need to get this trading range out of the way. So while the downside has potential -- should gold break out of this range to the upside odds would favor a run to 1200. For now, we will favor the downside until the highs at 1130 get taken out.

Pattern - The pattern can be interpreted as choppy and overlapping. But it also has attributes that can go either way. The red and green moving average and the down trending blue line at the 1080 area are short term key points. THIS MARKET cannot take many more probes .......or it will give way to the downside short term.

119

What next ?

When viewed on the 60 minute chart, gold certainly looks volatile and unexpected swings are whip sawing. But when we look at the chart below showing gold inside a triangle pattern, this is exactly what we should expect and sideways and choppy pattern. In this context gold is still in the confines of a medium term correction.

Does gold run back up to 1135 or does it finally break support? It would seem the weight of the evidence tilts to lower into month end. However, with the chart pattern so choppy, clearly anything can happen. We've discussed gold moving above 1130-1135 would suggest the resumption of the short term trend as up. However the daily chart below shows that gold could actually still be in the original triangle we laid out at the beginning of the month. Clearly we can see here that the resolution to the medium trend remains neutral until price breaks out of this pattern. The potential to remain inside this area for another few weeks is also possible.

Should gold break the 1075-1082 area the short term trend would flip to bearish.

Bottom line: On a medium term basis.....neutral. On a short term basis ---neutral/slightly bearish. Odds favor the trading range to continue and as long as we are below the downtrend line of the triangle the downside cannot be eliminated. With SEASONAL pressure in full force over the next 30 days gold bugs beware. If you made purchases near the bottom in February, it would be prudent to have a stop loss working in case of a breakdown. If your worried that your too exposed, then use a stop.

The debt crisis has not gone away. Money is fleeing Greece as limitations on exchange is being implemented. The Commercial Real Estate situation in USA is toppling banks left and right. The situation continues to deteriorate into an environment where anything is possible......and many times its the opposite of what we expect. Lets remain extremely cautious. The triangle shows gold can go either way still.

Until we move above 1130-1135 expect choppy to sideways action. Watch 1090-1095 tomorrow and 1082 on the downside and 1114-1121 on the upside.

===============

Gold February 22 11 PM EST USA TIME

Last night's listed resistance at 1130-1135 held as gold got to 1131 before pulling back. Initial support was listed at 1106-1116 and we hit the middle of the range coming in at 1110.50 just prior to 11am EST New York time. Most technicians are using the triangle channel pattern and tonight I'd thought I'd take a look at the downtrend parallel channel (within the triangle). We viewing gold on a 8 hour bar chart and it helps to put gold in context of where the key short term channel seem to be. As of tonight gold continues in a neutral price zone on the short and medium term.

From a bullish standpoint the continued reversals up in gold are impressive. Thursday nights update discussed the (turnaround Friday) scenario how throughout this bull market gold somehow turns things around. Again we witnessed it last Friday as gold reversed a sell off and turned it into a rally. Gold has staged these reversals at 1063 and 1078 on the way up as well.

On the bearish side we have potential seasonal cycles due that suggest gold could be moving lower into the early March on the short term and we are at important resistance. A close look at the daily chart shows just how many times gold has traded at the 1110-1115 area in the past three months. Given the extent of the US Dollar rally gold has actually weathered the storm quiet well so far.

Resistance is obviously 1130-1135 and then 1160-1183. Key weekly support is the 1040-1050 area.

The neutrality is even evident in the five minute charts as price is in the middle of its range since 2/17/10.

initial support is the 1106-1110 area and daily is the 1080-1090 area.

What next ?

Neutral is a position and the only one that best describes the current price action we are seeing. It looks like gold is ready to make its next move, but we're not sure if it's back to 1130 or higher or if it's below 1100 or lower. By the price we see, no one else is quite sure yet either. Oh there are sides taken and I can understand the basis for each. It's just that price is neutral and its a draw to the odds.

There is a mini uptrend channel. Channel Support lies at the 1106-1110. as long a we hold that area gold can continue higher. Channel resistance is the 1130-1135 .

Bottom line: Neutral as neutral can be.

=============

Gold February 22 7 AM EST USA TIME

Gold comes into the week at NEUTRAL in all aspects. (see Medium and Weekly button for additional comments.)

Gold remains just below key resistance of 1130-1136. The 60 minute chart shows gold's uptrend has covered 90 dollars to the upside since the low. However price has been very choppy and the pattern has a lot of overlap in price. This type of pattern is usually suggestive that is it not the "MAIN" trend. Still, a sustained hold above 1130-1136 would suggest gold's next move would be a rally towards 1165 (the January high).

Initial support is the 1106-1116 area which takes into consideration the fast yellow moving average up to tiny blue and purple averages. Weekly support is the 1085-1095 area.

Resistance is the 1130-1136 area followed by 1165-1183.

What Next ?

We can see the chart and the choppy congestion since 2/15/10 at this 1130 area. And this is what it really comes down to for gold......can it get above the 1130-1135 area? The question of course is whether gold is going to pullback from this area into March or whether gold is about to bust out higher into an end of month rally. Gold ability to reverse higher on each sell off event in the last few weeks is countered by the cycles that suggest a peak in this time frame and a pullback into next week. As we can see gold has actually been in a sideways pattern since the 15th of the month. The potential for gold to remain in this trading range is certainly a option as well.

A view of the 8 hour bar chart below shows gold really in a choppy/sideways pattern and that price is very close to moving above the down trending line which stands at the 1130-1136 area.

Bottom line: Above 1136 suggests a move higher towards 1165. Below 1130-1136 suggests gold will remain choppy and range bound in the 1085-1136 area this week. Support seems to be strongest in the 1105-1115 area. Neutral is a position that we have to respect today.

What next ?

Both the short and medium term trends remain neutral. Any move above 1135 suggests 1180-1220.

Bottom line: We await for gold to come out of Neutral. Odds favor the pressure remains on the upside, but we will be quick to reverse should gold move above 1135. Until then we are neutral.

Gold February 19 12:01 AM EST USA TIME

GOLD HAS ARRIVED AT THAT POINT IN TIME AND PRICE THAT I CALL IN THE MIDDLE OF NEUTRAL. An that is simply defined by price and the chart. The rally from September retraced just about 50% of the gain during this sell off to 1044. The current rally from the 1227 to the 1044 bottom just retraced about 50% of the loss back to 1130. This puts things as neutral as can be and in fact very choppy. This is what we are going thru with gold. I want to hone in on the seasonal again tonight and focus on the dynamic's of what I think is going on. (the weekend report will detail it in full).

From a pullback view gold is in a sideways correction. And gold is acting like the seasonal says it should. Choppy. Notice we have arrived at the time that gold gets its weakest of the entire year. It's important to see what is supposed to happen. Below is the chart and the seasonal. SUPPLY/DEMAND IS MAKING A DECISION AS TO WHETHER we move lower or whether there is not enough supply and a contra seasonal rally up is about to transpire.

The chart below shows we are in a medium term neutral zone. The low of this sell off at 1044 was about where the highs of October were. So we are in the middle of a four month range in price. I'll follow up with the weekend report on this subject.

Scroll down for Friday outlook.

Clash of the Titans

Here the short term technical status on the 60 minute chart of April Gold. The bulls and the bears are locked in a fight for control. That control lies NORTH of 1130 and 1170-1183. But first is above 1130. Technically its a show down. The arrow is drawn off the bottom neckline of a head and shoulder chart formation. The subsequent sell off when PRICE broke below the significant lows of January 12th and 14th. (the mid month peak). Notice that the beginning of February's rally when right back to that spot and was pummeled 90 dollars in a 3-4 day raid. Since that low the rise has been steep......steeper than the drop really when viewed in context. But is has been one choppy overlapping futures traders nightmare as head fakes every 48 hours are the norm on this rally. You can appreciate how I selected 1120-1130 as weekly resistance on Monday as the most likely place for a top in price this week. The 1120-1130 area with held every shot so far this week. It's chart reading. That's all. We all have our means to get there............Gann, Elliot, Fibonacci, and a host of others. But a chart, when looked at properly can provide a lot of clues as to where the turn points are without knowing all the other things. Not that they're not GREAT and I love to look at all the reports I can get a hold of and have the respect of each method. They are fascinating and helpful when properly used.

For those of you who are not versed in all of the studies of market price theories....... Isn't it nice to know that there is no esoteric Chrystal ball involved or study to see where the most likely important price points are going to be. A lot of times they are attainable with a chart study.

The neutrality of the chart shows why the gold community is so divided. THEY SHOULD BE IF THEY ARE DOING THEIR JOB ! LOL The fact that they are divided means one thing right here. THEY HAVE AN OPINION. If they or I for that matter knew for sure, we'd be in Rio sipping on a cool drink....or whatever or fancy. The work and theoretical application of market study is to try and ascertain which way its going to go. And some are better than others.

The other alternative is to let the market decide and try as best to follow it. When it makes its break you follow it when the odds seem most in your favor.

The one thing this rally has got going is the reversals (red arrows) that have taken place. EACH push down has been met with a strong BULLISH answer saying .....NO......we're going higher. Those are strong market signals. Now the bears have made their stance where we suspected they would this week....the 1020-1030 area. There has been about 20 BAR HITS there on the chart this week.

SUPPORT is the 1085-1095 area. That encompasses the aqua downtrend line, the green, red and yellow moving averages, and the last reversal point on the chart. Arrows 2 and 3 at the 1070-1077 AREA is also daily support and is key.

Notice how when price gapped up on Tuesday that it sat right on the RED moving average before moving higher. Notice how the Wednesday night drop was right to the RED moving average again and is where support held. Today rally bounced right off the upper channel line and the latest rejection has sent gold back to the support areas.

What next ?

It's time for......turnaround Friday ?

I cannot count the amount of times gold has come back on a Friday to push forward. Sometimes its the jobs report where gold sells off in the morning but reverses strong in the afternoon or when big lows like a few Friday's ago when gold hit 1044 and reversed back up. But its enough to take notice. Weekly closes are more important that daily ones.

Summary: We go into Friday -- knowing there's a strong seasonal tendency to move lower. The feds raise rates in the US......the IMF says its going to sell gold and the dollar bulls are clinging on to the 80 level.

Psychologically the 1080-1095 seems pretty important to me over the next few days. If gold were to break that bid it could spell SEASONAL IS ON. Meanwhile a break above the 1130 -1135 area would lead to a test of the January highs at the 1165 area (with the potential for more) and would put an end of February price high on the charts.

The most likely (which is not always the case) is that gold will weaken. I think they THREW OUT EVERYTHING THEY COULD ABOUT GOLD TODAY............Obama saying we have a deficit crisis that needs to be worked.......the tiny interest rate rise by the USA, and the gold sales announcement......are just SO CONVENIENT at this critical price juncture. (They look at charts and the GOLD CHART is for all the marbles.....yea, its that big. )

IF GOLD rejects this and moves thru resistance we'll stretch out to month end.

BOTTOM LINE:

Gold has been hit twice and somewhat hard. Should gold reverse and move above 1130 expect an explosive move of 30-50 dollars higher real fast. (We'll keep turnaround Friday in mind. Don't expect it, but if your watching the chart you'll know if it begins.)

On the downside.........it is mid-month, we have reached resistance and the seasonal points STRAIGHT DOWN.

Its 1130 on the upside for the breakout, and it's 1070-1090 on the downside.

THE POTENTIAL FOR A BIG MOVE IN THIS TIME FRAME IS A LIKELY TIME TO DEVELOP. We'll try out best to jump on or get the hell out of the way........depending on which way it moves. Tomorrow is KEY.

Watch the SUPPORTS MENTIONED and the RED arrows on the chart to see where support will come in if we start moving below 1089.

INTRADAY RESISTANCE IS 1109-1116 -- this is a key area also Friday to watch.

For Friday...... cycles has the odds favoring higher (turnaround Friday), but technically, everything else points like it needs to come back towards 1080--1090 on Friday.

WATCH CAREFULLY Friday ------- there's a lot of knives thrown at gold. But anything still goes until we bust out of this range............lower or higher. At this point THE US DOLLAR HAS MOVED up again. Be on high alert.

Odds favor weakness. Watch 1109-1116 ---- if we can crack that odds favor support.

============

Gold February 17 11:30 PM EST USA TIME

Let's got right to last nights bottom line....here' what we had to say....

BOTTOM LINE:

Odds favor a consolidation day on Wednesday....If the bears are still in charge. SINCE we are in a seasonal weak period, we might see some whipsawing in price.....or outright short covering. IF WE EXCEED the 1122-1128 area........then 1135 would be the last hold before 1147-1163.

If we can hold 1122-1128 gold could pullback to 1095-1108 area where the MOVING AVERAGES are all converging to try and build a wall of support. THE SHORT TERM TREND IS UP ---- and if we punch thru this resistance --- WILL remain BULLISH. Watch the 1122-1128 area ---- I think the bears try and hold that area on Wednesday.

We discussed Yesterday that "Wednesday is shaping up to be a battle for 1120-1130." The high for the day was 1129.20 right at key resistance upper range-- a dollar above 1128 and a dollar below 1130. Indeed the bears were able to hold off the bulls as price hit 1129 in the overnight session and a pullback developed that brought gold down to the 1113 area by 11:30 AM EST in New York. Gold rallied back to the 1121 area going into the COMEX close. But after hours today a rout of gold began. We mentioned that if the bears held 1122-1128 that a pullback to 1095-1108 could develop. The low so far since the 1129 peak just under 24 hours ago was 1099. Let's look at the 60 minute chart. We can see the top today at 1129 and how it ever so briefly pierced just a bit above the Feb high by about a dollar or two before it turned down. The action was after the New York close when gold dropped all the way to 1099 before a slight recovery. Now lets look at the red arrow just under 1100. This is where to gap in price occurred on the open Tuesday. We mentioned this as well on Wednesday saying: "THERE'S a GAP at 1095-1101 where price did not trade as it opened the week higher from the start. That's usually a magnet for price. "

Notice how price has moved down to test this area. The last three peaks also look very similar.

What next ?

The big question is whether we saw the price peak for the week and possibly for the month? The high today was right at the anticipated price range in the anticipated time.

The entire drop from December is 180 dollars. The rally back up to 1030 was a approximate 50% RETRACE OF THE CORRECTION. 50% is powerful number in markets.

Odds have certainly gained favor for a mid month peak after today's action

Thursday's initial resistance is the 1108-1118 AND WEEKLY is at 1120-1130.

SUPPORT is the 1088 -1095 area initially, followed by 1063-1076. In sum we need to be on guard here. The seasonal chart tells the story (calendar on bottom of the chart). The end of February and beginning of March have done so in the past. Today's top price and gold hold at 1130 still leaves the downside to month end wide open.

Bottom line: The failure to get above the 1130 area leaves gold in a defensive posture for Thursday. Odds have increased that the short term mid month cycle lower might be beginning to take effect and if that is the case we have to be careful.

Odds favor another gold consolidation in the triangle we are in. I suspect we stay rage bound within the support numbers I gave you.

=======================

Gold February 16 10:30 PM EST USA TIME

The Bottom line from our last update:

"As long as price keeps making higher highs and higher lows in the short term prices are favored to remain up. With that said a MID month peak has been a factor the market has been going thru, and FROM a cycle standpoint would favor a high this week and pullback to month end."

Clues from last update:

"Thus gold accomplished three things on Friday's session. It gave us a consolidation day, it tested the exact support area we mentioned, and then it kept the option alive of keeping this bounce going by closing above the green moving average."

"The one that that really is bullish so far is the amount of REVERSAL bars we are seeing. The lows of Feb 7th, Feb 10th and again on Friday Feb 12th all show a market that was sold DOWN but was quickly reversed to the upside. Friday's action saw this reversal in the London session and then again in the COMEX New York session and the fact that it occurred just above the fast yellow and tiny purple average seemed to send a powerful short term message that gold was not ready to end this bounce. "

What we didn't like.......

"I don't like the overlapping pattern of price thus far as it moves up into mid month. This is suggestive that the uptrend going into mid month should peak this week and we should see lower prices into month end"

Today's action

Just to be sure on Monday's update I listed three resistance area. Initial, daily and weekly. I never know which one's are going to provide the peak and for the most part you've probably noticed that the initial resistance is the one most often hit in price. On an above normal day, Daily resistance levels are hit and on an extreme day the weekly's get hit. Most of the time prices the levels are reached as the week wears on. A lot of it depends where price starts out for the week. On Tuesday we were below all three and we were coming off a three day weekend and the news of a significant drop in the COT (Gold and silver short positions) had the COT analysts (ala Ted Butler) and a few others discussing the significance and which is why I mentioned it in the weekly update (WEEKLY BUTTON). In any event the gold rally made it to our weekly resistance area on day one this week as we listed 1122-1130 area that price zone. Today's high was 1121.90 --- just 10 cents from the lower range of weekly resistance.

But the dynamics of the moving averages are also important. Resistance listed was (initial) 1098-1100 and (daily) 1107-1115. Look how price reacted once it broke above 1100 ---------and then when it reached 1115.

The first long arrow is the 1098-1100 area.

Notice the price velocity as it moved above 1098.

It took a slight pause at 1107 but rallied to 1115.

We can see that once we reached 1115, price consolidated for the next 12 hours.

The three peaks were right at the 1120-1122 area.

Thus we've reached weekly resistance.

What comes after Weekly resistance? MONTHLY RESISTANCE.

Monday recap........

New of China buying Gold and Oil ETF's and a huge reported commercial short position in the US Dollar had gold gap up five dollars from the get go as the USA market's opened Monday Evening EST time for the first time in three days and the demand was pent up from the start. The other development was the strong rally in the EURO.

The Euros' vaulted 200 pips in rather short order and removed the losses for the last 10 days as a reaction bounce is under way.

While gold might have been 120 dollars off it's highs in US Dollars, it's right at the all time highs in the Euro.

And that is what gold has been doing over the past month is making up time in the other currencies while the US Dollar was strong.

Resistance for the Euro is 139-141 and 145-147.

From our end we already knew the EURO was the main component of the US Dollar rally and we published a chart confirming it in our weekly report yesterday showing how weak the US Dollar was to gold.

WHAT NEXT ?

Well we are right back where we were at the beginning of the month........circa the 1120-1125 area. Let's take a look at the 60 min chart of April Gold. ( I HAD TO REBUILD THE CHARTS on another computer so they have a slight different look.)

The red arrows show the "reversals" we saw last week each time the bears tried to force the market back down. The most important one was the 1063 (see the two arrows together) reversal and we highlighted it the night it happened. The other one was the 1078 hit that was right on our fast yellow moving average on Friday morning. As I mentioned above the one thing I did not like was the overlapping pattern and on yesterdays weekly one of the parameters we put on a sustained rally was it would have to get IMPULSIVE. Tuesday's rally fulfilled that requirement.

SUPPORT - 1100-1107 initially and 1088-1095 daily and 1063-1078 Weekly and finally 1015-1040 Monthly.

RESISTANCE - 1122-1135 weekly and 1163-1183 Monthly. (1122-1127) should be a tuff nut to crack tomorrow. If we got thru it like Swiss cheese look out.

The first thing we need to go back to is the mid month highs we've been accustomed to in the gold bull since August. The other is how close we are in proximity to the HIGHS of February. It was at this area that gold peaked on the 3rd of February. We can see once price dropped below the green and yellow averages how we plummeted on that 50 dollar day which ended up being the flush out that busted some daily and weekly channels on analysts charts that prompted the bearish comments of last week.

There was some back pedaling going on over this last weekend at different websites and this is the reason I always say what really matters is what price does after the penetration. And sometimes the flush outs are huge. In silver a few weeks back I mentioned that I had liquidated positions at the 16.30 area expected a potential break. The drop was all the way to the 14.60 area before it stopped and was WELL below the channel. Coming into tonight, silver is knocking on the door and has re-entered the 16.00 area channel as is only about 20 cents from my exit. Now I have to figure out if I re-enter or not....and that's never easy. There will be times when channels will be penetrated and price will drop.....as it the case of silver it was almost two dollars. But price reversed and has come back. It is just something we have to live with in trading. It's not going to play out each and every time. A lot of times, yes, but not all. But the most important point is NOT WAITING until silver is under 15 to go short and then not having a stop loss in the expectation that all will play out. Quite frankly the silver chart still looked bearish coming into today. The key now for SILVER and for gold to some extent is does the rally have room for higher prices?

There is a short term cycle high that is due and in most cases would take us lower into month end. I discussed on a number of occasions in the past few weeks that the market is becoming savvy of that play and while we should still expect it, we'd be best off waiting until there is some sign that its having an effect on price. The other potential we are grappling with is the possibility of a seasonal inversion. As of tonight, there is still no confirmation of either. What has transpired is gold has rallied to mid month........and right to our weekly resistance zone of a MODIFIED 1122-1135 (I've added five dollars to the upper number to take into consideration the 50% retracement of this sell off)

Let's look at an 8 hour chart.

We can see the head and shoulder top from where the last sell off occurred an how price has now returned to that area. Powerful is the term how gold erased that 50 dollar down day. Now it's most important test is here......to move above the neckline and that right shoulder. There is probably a lot of stops above that 1130 a-1147 area.

In fact today seemed very characteristic of short covering. One thing is for certain. THE BULLS KNOW -- AND THE BEARS KNOW that this price area is the fight for short term control of the gold market. Do the bulls have enough buying power to go trigger the stops above ? Any move much beyond the 1130-1135 area would put the bulls in short term control (if they aren't already). Since the banks that are short relieved a lot of positions, it might give them room to sell into the market........but they surely must be concerned all over again.

In a sense we can say that the genie is out of the bottle and the escalation of events financially on a global scale is at a position that the MATH doesn't work anymore when anyone looks at the numbers.

What next ?

Wednesday is shaping up to be a battle for 1120-1130. When we look at the rally its been relentless since we held that 1080 area.

IF THE MID MONTH CYCLE IS TO PLAY OUT..........it needs to happen soon.

Tuesday comes down to the gold downtrend resistance line. Note how gold has spent the better portion of 10 hours knocking at the door. Directly above it is the highs of February from where the red arrow is pointing. It is above here that would instigate more buying and short covering.

Thus the 1120-1130 area IS very important. I don't know what to make of the on balance volume at the bottom of the chart. This rally buying has been transacted on the BID price instead of the ask. In order to transact on the bid, there must be willing sellers there......for now anyway. Should we see buying on the ASK and OBV goes up, it will favor the bears.

THERE'S a GAP at 1095-1101 where price did not trade as it opened the week higher from the start. That's usually a magnet for price.

BOTTOM LINE:

=============================================

Gold February 15 12:01 PM EST USA TIM

In our last update we were looking for a consolidation day for Friday and for the most part we got just that as gold moved lower from the start in the far east, bottomed a few hours into the London trade and doubled bottomed at the same spot during the New York session. Support was listed for Friday at 1075-1082 and the low turned out to be at 1078 within the support band listed. From there the gold market rallied back up to finish the day near the area that gold began. We can see where the purple Gann support line at the bottom of the chart provided support while the gold Gann line provided resistance on the upside. Our intraday email Friday was thrown a curve as our expectation going into the afternoon suggested a pattern that favored a sideways to lower pattern but that never materialized and gold after a 15 dollar sell off reversed all of its losses.

One of the things we had mentioned on Thursdays update was the fact that all through this bull market gold has seen a lot of turnaround Friday's and we wondered if we would see and opposite effect. Well, we got both. Gold gave us 15 dollar drop in the morning and then "turnaround Friday" went to work and erased all of the losses.

The one area we did mention to look at as to whether to quantify if the bounce was complete or not was this:

"Any drop tomorrow below any more than a few dollars of tiny purple moving average will tilt the odds that the bounce is complete. "

The red arrow shows the lows of Thursday right where the purple and yellow moving average met. As you can see gold supported right at this area on the chart.

We also mentioned one more thing about the odds of moving lower. We said that until gold climbed back above the green moving average that odds would favor lower. This was posted at a time when gold had opened in the far east just below the green moving average on Friday morning far east trade. Incredibly, gold traded down to our moving average support area but not to be outdone, it rallied back to close above the green before the after hours session ended on Friday. Thus gold accomplished three things on Friday's session. It gave us a consolidation day, it tested the exact support area we mentioned, and then it kept the option alive of keeping this bounce going by closing above the green moving average.

What Next ?

Trading for Monday will be unusual as USA markets are closed for a holiday (President's day). This makes projections and the outlook difficult. Lets zoom in on the 60 minute chart for April Gold.

The tiny blue and purple moving averages are above the fast Yellow average and that puts the short term in an uptrend. I don't like the overlapping pattern of price thus far as it moves up into mid month. This is suggestive that the uptrend going into mid month should peak this week and we should see lower prices into month end. The one that that really is bullish so far is the amount of REVERSAL bars we are seeing. The lows of Feb 7th, Feb 10th and again on Friday Feb 12th all show a market that was sold DOWN but was quickly reversed to the upside. Friday's action saw this reversal in the London session and then again in the COMEX New York session and the fact that it occurred just above the fast yellow and tiny purple average seemed to send a powerful short term message that gold was not ready to end this bounce.

Support for gold is at the following areas: Minor support is the 1085-1090 where the tiny blue and green moving average converge. INITIAL support is the same as Friday, where the fast yellow and tiny purple moving averages are in the 1073-1078 area. As long as we remain above that area the SHORT TERM MARKET will technically be classified as up trending. ANY MOVE BELOW THE FEB 10th LOW ....say 1058, should revert the short term market back to favoring the bounce is over.

Resistance is the 1098-1100 area were the aqua downtrend line is and the 1107-1115 area where the SLOW Red moving average is and a key Fib retracement area (not on chart) resides. Finally the 1122-1130 area is the key weekly resistance area and will have more to say if gold should rally towards there.

Bottom line: As long as price keeps making higher highs and higher lows in the short term prices are favored to remain up. With that said a MID month peak has been a factor the market has been going thru, and FROM a cycle standpoint would favor a high this week and pullback to month end.

With China and Hong Kong markets down for the lunar new year and the USA closed on Monday, making a forecast is difficult. It would suggest a small trading range, probably in the 1088-1098 area for the most part. Lets see what happens and we will update Monday evening New York time.

==============================

Gold February 12 2010 1:40 AM EST USA TIME

Coming into this morning things still looked pretty weak until the announcement came that Greece would be bailed out and commodities took off on the news. It seems counter that the metals plunge every time that someone yells default. But we can look at it this way. If a default is allowed it signals to the markets that the Governments will allow a credit contraction and that is bearish for everything except CASH MONEY. Every time they signal a bailout they are indicating the printing press will keep running and therefore the metals respond correctly.

Gold responded by blowing out our first resistance area of 1087 and rallied to the 1095 area...the upper initial resistance zone mentioned above. In after hours we almost touched 1100. Then out of nowhere the exchanges reported that margin requirements would be raised up to 25% across the board. This after a 150 dollar drop in price and a new potential low point developing. Where India last bought. And China sent a BIG signal that I'm not sure everybody realized how important it was. They said they will diversify and also purchase some Gold ETF's along with their physical. Now.....let's think about what that means. Let's read between the lines.

This is what I heard between those lines. "There is not enough GOLD to go around and we want to buy NOW and get rid of this "TOXIC MONEY" we have that's called the reserve currency. Boy --- that's some reserve the USA comes up with. And the S.S. EURO --- whacking into Icebergs left and right.

Let's look at the 60 min chart of April Gold. We can see the spike down and reversal at 1063 that we discussed yesterday. That reversal led us to slightly favor the bulls and expect a higher move into Thursday. We gave resistance at 1080-1087 and 1095-1103. Gold blew right by our first resistance when work began leaking out that a deal was brewing. After a move to 1090 price came tumbling back down to the 1076 area. But look how the lows were right at the tiny blue moving average and the dark red 8X1 Gann line (which has been providing support on the way up). Another launch above 1090 developed in the New York session and drove prices to our 2nd resistance area of 1095 - 1103 zone.

Here's what we said about that in yesterdays update on our Bottom line: "Odds favor a higher price on Thursday to at least test resistance gold has been trying to overcome, but it could possibly extend this bounce."

What next ?

Today's price escalation came after gold spent three days at the 1080 area and had three attempts. Our last update commented ... "Thursdays outlook is to test key resistance at the 1080-1087 area. WE don't think the odds favor the bears will be able to hold a 4th attempt."

Tonight we see that gold is now trying to support on the medium Green moving average. It has spent nearly 10 hours here. Notice how the far east open was below the green average but supported on the brown Gann line. Each bounce during this sell off has reached the blue downtrend 38% line and has penetrated above it before turning back down. This is suggestive that UNLESS TODAY WAS A SQUEEZE and just a bounce that we will get one more push tomorrow. If today was it and gold closes below the 1070 area it would suggest that the mid month peak for gold is IN and we have further price erosion in pullback form next week.

Resistance 1100 to 1115 zone. A close above 1115 on a Friday would extend the potential for the rally to last longer than mid month. Support is the 1075-1082 area followed by 1058-1063.

Gold has been known in this bull market as turnaround Friday.....having erased many pullbacks and rallied to save the week. Will that play out again tomorrow but on the opposite end ????? Any drop tomorrow below any more than a few dollars of tiny purple moving average will tilt the odds that the bounce is complete.

Cycles are no help on Friday. It comes down to whether we fail here or push higher?

Bottom line: Odds favor a consolidation day. However Silver has a gap that needs to be filled. If that should happen in Silver land the potential for gold to move to the blue downtrend line and up to the Slow Red moving average might develop. Watch the blue downtrend line, the red moving average and the 1X1 Gann line (1100 to 1115) on the upside. Do you see the price on this chart how it's just below the green average? UNTIL GOLD CLIMBS BACK ABOVE THE GREEN LINE.......Odds will favor lower.

In sum -- the case can be made either way. Lets see what it does now.....whether it fails above 1087 or moves to above 1100. My gut tells me GOLD is not ready to close above 1100 on Friday. Not yet. But its my gut....not the chart.

Have a great weekend......and may you prosper.

====================

Gold February 10 2010 11 PM EST USA TIME

Our last updates outlook for Wednesday was for a pullback to our support areas. We speculated that 1080-1087 would be a tuff nut to crack on Wednesday and the high came in at 1083. Minor support was listed at the 1070-1072 area and key support at 1060-1063. The pullback forecast played out as by 10:30 this morning gold was off 13 dollars going into our key 10am -11am timeframe. The low for the day was 1062.80, just 20 cents shy of the 1063 support zone. Our 10:45 am email update alerted readers that the pattern for the day favored higher prices for the remainder of the day and we followed up with a resistance area at 1077-1083. The high came in at 1078 before we pullback to settle at the 1074 area.

Today's low at 1063 was yet another SUCCESSFUL test of a chart we showed you last night.

We can see that the past few days gold has held this area and a burst of buying comes in.

This occurred again today. Same stuff....different day if you will.

The 1053-1063 area is now KEY SHORT TERM SUPPORT. As long as gold is trading above that area the potential for another attempted test of the 1080-1087 seems to be an odds favorite for Thursday.

What next ?

If we look at the three arrows at the bottom of the chart below, we can see that gold has now supported three consecutive times at the 1060 area with today providing another KEY reversal higher. This is suggesting that UNLESS THE BULLS can be stopped at 1087, they are going to re-gain short term control of this market and make an attempt at the 1100-1110 zone. Notice that the bears have already had to stop the bulls at the 1080 level 3 times also. Thus the short term battle is about to be decided and we think going into Thursday the bulls seem to have the advantage. Or do they ?

What Else ?

RSI arrives at overbought

MAJOR RESISTANCE

Price at 50 and 200 week long term moving averages.

William's %R also at overbought

MACD

The US Dollar is obviously a concern to gold bulls. The debt crisis is escalating and there is a credit contraction underway. The problem we have in analysis is during the crash of 29, gold was fixed and with the exception of Homestake Mining (which every analytical bull has already shown it's tremendous rise) the fact remains that we don't have gold with which to measure that time period. Even more interesting is the fact that the 50 and 200 week average is sitting right in between price on the dollar chart. That means that the dollar is virtually UNCHANGED IN THE PAST YEAR AND IN THE PAST 4 years in average price. It certainly blew me away. Not only that but the 80 level IS WHERE THE BREAKDOWN of the dollar was, and is an area that had held throughout it's history on the index. Just as we suggested in our previous update that gold's drop to the 1040 area was a "return move" to the original breakout.......the DOLLAR is also at the "return move" of its breakdown.

Thus the reserve currency of the world and the real money of the WORLD are at a major inflection point on the price charts. The fact of the matter is that the Euro is 47% of the dollar's index weight and the tremendous drop in the Euro has lifted the dollar and has played a major role in its up move.

What else ?

Interest rates are also knocking on the door of a MAJOR LONG TERM Support/Resistance area and should the 30 year bond begin exceeding the 5% level, it would signal that the great drop in interest rates is over and higher prices are coming.

What else ?

The other factor was the big drop in silver and the channel penetration on the chart did severe damage. Couple that with the arrival of mid month and there are a lot of reasons to be bearish on Gold right now.

However ..............

But gold has one thing going for it that is the most important factor that TRUMPS all other aspects. SUPPLY AND DEMAND. With the gold markets total universe smaller than Microsoft or Wal-mart in dollar terms, it wouldn't take much to get an avalanche going to the upside.

The 1044 low was at the same price level that India announced their 200 Ton purchase.

However ..........

The gold stock GDX and the HUI both are at the bottom of their channels and have so far supported.

However .........

China is very upset at USA for having sold 6 billion dollars of WMD's to Taiwan. It is highly unlikely that they are not going to retaliate in a BIG way..............and it won't be with guns, it will be with financial or with their PUPPET backed IRAN. Indeed there has been a warning that February 11th (anniversary of Hostage crisis in 1979) will not go by unnoticed. Now this could be an idol threat............but it might not.

A look at the daily chart also begs the question of whether we've seen the LOWS? Even if we haven't there is nothing to say gold can't rally to the down trending blue line....where price has rallied and bounced off of for the last month.

WHAT ELSE ?

The seasonal chart shows a sell off form Mid February to almost the end of MARCH IS DUE. The new updated season to 2007 now encompasses a lot more aspects of the bull market as the old chart was only good through 1999. We witnessed a "seasonal inversion" when November produced a high instead of a low

and December produced a high. (the calendar is the bottom of the chart months and the top is the nearest futures contract.

January and February is playing out exact so far.

Yet is shows that gold is poised to move LOWER from here and not higher.

No wonder so many of the good analysts (not the perma bulls or bears) are neutral to bearish on the outlook in gold over the short to medium term.

Adding to the bearish case is the fact that the mid month cycle high is due to peak either Friday or by Monday/Tuesday.

This too would be suggestive that gold is going to fail this bounce and move lower over the next 30 days or so.

Epilog

When we couple all of the factors into the kettle, you can see how easy it is to produce Neutral Soup !!!! Indeed the case for both sides can be compelling depending on one's perspective. Indeed it almost seems to be too easy to be BEARISH as there are so many factors point in that direction.

Support is the 1058-1063 area followed by 1148-1153.

Resistance is the 1085-1087 area followed by the 1095-1103 and 1110-1115 area.

Thursdays outlook is to test key resistance at the 1080-1087 area. WE don't think the odds favor the bears will be able to hold a 4th attempt.

The best way to rectify the current situation is to expect one more leg up on this bounce into a peak over the next three trading days before the next pullback. SHOULD GOLD fail 1080-1087 then will get another pullback to check out support.

Bottom line: Odds favor a higher price on Thursday to at least test resistance gold has been trying to overcome, but it could possibly extend this bounce. We basically have to wait in the short term till either side gives way........the bears at 1085 and the bulls at 1060. SO the trend itself is NEUTRAL. 1060-1085 has been tested three times. One would think that the 4th test will be the one that sets the tone for the next few days. When we weigh all the evidence tonight...............we get Neutral Soup. Since we held support three times and we are up trending since Friday and Wednesday was another reversal up at 1063............we give the odds on Thursday to the BULLS, but ever so slightly. Any pullback that breaks 1058 will shift the ODDS back in favor of the bears. Anyone who played he lows at 1063 and picked up some "product" today that is a short term trader might consider a stop about 5 or 6 dollars below 1063. Lets see what happens and which area breaks first.....support or resistance.

----------------------

Gold February 9 2010 11:30 PM EST USA TIME

Yesterday listed resistance of 1080-1087 held gold as the high came right in the middle at the 1083.50 area and the forecasted bounce also continued. We suggested to watch Crude and the Euro and both also rallied. The Euro had its best day in a while as news of a potential "fix" for Greece had all the essentials going up and of course the US Dollar taking a break. Our first level support was listed at just above the 1160 area and the low came in at 1163. We can see the reprint from last night as gold spent 24 hours building up support in that area on the tick chart of April gold.

We can see where price tagged along the slow red moving average and once medium green moved above and "crossed" it sparked a 20 dollar rally on Tuesday that led gold to reach the resistance area we cited earlier.

Coming into the Wednesday timeframe gold has reached its first real important test of this bounce as price is now trying to enter an area that was medium term support. The question now is whether it is going to become RESISTANCE.

Lets take a look at the 60 minute chart of April gold

This zoom out encompasses the entire correction since the December peak. We can see how gold has followed the Blue downtrend line continually bouncing off it at each low. From the Winter Solstice (Dec 22nd) low of 1075 gold rallied to the blue 38% resistance line and then sold off again. The same development happened at the end of January as gold had a sharp beginning of the month rally to that same resistance line. We suggested on our update the evening after gold had hit 1126 and that resistance line that gold had achieved our target for the week and speculated that gold might be putting in the top for the week. Look at how that price peak was just a quick penetration of the line and how our key Green and Red moving averages were right at that area as well. In the markets of today the manipulators are very well versed in technical analysis and that is why I continue to ADVOCATE that its not the penetrations of support lines.........its what they do right after that COUNTS.

WITH THIS IN MIND --- that is why it is very important to see what gold does here in the 1075-1100 area. The 1070 area was a key medium term support area. It had become so evident and cited on many updates on the internet. That was the main reason our update suggested right before the drop that the MARKET would most likely take out that area and clear out the stops......and it did so in dramatic fashion as the plunge reached all the way to the blue downtrend line before getting rescued by that support area.

If we zoom in on the chart below we can see that the expected bounce so far has continued to hug the tiny blue moving average confirming the important role and interaction it has with price. It is a VERY RARE incident that we get PRICE GAPS on a 22 hour per day chart. LOOK at the one we got last week during the crash. It is interesting how price spent 5 hours sitting on Tiny Purple moving average before a major gap occurred. The reason I bring it up is that today's price returned to the area were gold traded at (1083-1084) RIGHT after the gap. Even more fascinating is that the Fast Yellow moving average and the Medium Green average is flanking the top and bottom of the Gap price at time when gold is just arriving there. Thus the KEY RESISTANCE to watch is this 1087-1100ish area. Additional resistance is the 1110-1130 area where the Slow Red moving average and last weeks high occurred.

Minor support for Wednesday is the area where Tiny Blue and Purple moving averages meet at the 1070 area. Thus the 1060-1070 area would be first level support and the 1048-1053 area would be secondary.

What next ?

We've already had a 40 dollar pop since Friday afternoon so the potential for a pullback to begin today or tomorrow from here or the fast yellow moving average has potential. We could pull down to the tiny blue and purple averages and if we held there the potential to move to the medium Green moving average would also be possible as that would give gold a chance to "FILL THE GAP" that is open on the chart. In either case we think one of the two areas will provide the highs for this week.

Cycles also are getting close to a potential mid month peak and a subsequent drop into months end as has been the case throughout the bull market. BUT it's not as clear as in months passed and the potential for a CYCLE INVERSION (like we had in December) is possible.

One of the difficulties with this year is that February/March usually produces price highs from which SPRING CORRECTIONS into April occur. The fact that we are making LOWS here in February suggests that gold and silver are much weaker than the market anticipates and a prolonged sideways market in gold will be with us the first half of the year or that GOLD and SILVER are making their lows in this timeframe and THE BULL MARKET pullback to the breakout area is just about complete and a big run up is about to get underway again. We're not going to solve that one tonight but its something that we need to keep on our radar. THIS IS USUALLY THE WEAKEST PART OF THE YEAR FOR GOLD AND SILVER.........and MANY A LOSS has been seen from those who have bought stock or metal in this time frame over the last decade. Can it be different this time ? With the global situation.....anything goes.

In any event --- ODDS grow that another decent move should be in store for gold over the next month or so and we'll be watching for the clues.

Support - Minor support is the tiny blue and purple in the 1070-1072 area followed by the 1060-1063 area and the 1048-1053 zone.

Resistance - 1080-1087 1097-1110.

BOTTOM LINE:

We think 1080-1087 will be a tuff nut to crack Wednesday but with the gap in that area, we can't rule out a move to the green moving average near 1100 either. We do think one of these will be this weeks high. So we favor a pullback to support to develop in the next 24 hours. None of the moving averages have crossed yet so technically the trend has not turned higher yet.

FINALLY --- is if the shorts were not above to cover a lot of positions and new buying comes in (1040 was the area where INDIA was buying) gold could still surprise to the upside. STOCKS/METALS/ and the EURO are very over sold on the short term........and the US Dollar is going to pullback at some point.

Keep in mind the PERSPECTIVE that gold has only really reached the bottom of old support where the triangle was and that for now.............gold has only neutralized the downtrend........and has not yet eliminated it on the charts. The potential to turn back down (at least a pullback/consolidation) is favored to begin near this area or right after the gap fill. Bulls should remain cautious.

=========================================

Gold February 9 2010 12:05 AM EST USA TIME

After a horrific plunge late last week, yesterdays update favored Monday to be a consolidation day. Minor resistance was listed at 1075-1083 and the high came in at 1076. As far as consolidation the chart below speaks for itself. We can see that the highs were right at the 1075 area (1076) and the entire 24 hours were spent in consolidation. Price kept above the Tick chart moving averages above 1060 as gold attempts to build up some gumption here and get back on track for the mid month cycle peak.

What next ?

In yesterdays outlook I stated that it comes down to what price will do at the tiny blue average. Looking at the 60 min chart of April gold below, we can see that the entire 24 hours was spent at the tiny blue average. We can see that the lows of the day we defined right where the average was turning. So far, gold has maintained above it as this first moving average on the chart finally turns up. We can see the plunge bouncing off the downtrend line and now getting ready to attempt a move towards the next set of moving averages.

Resistance

The first area (should we hold tiny blue) is the 1080-1087 area (tiny purple and fast yellow) and then the 1100-1110 area (Green and Red moving averages).

Support

Support is the moving averages just above 1060 and then the two grey horizontal lines from 1048 to 1053.

Bottom Line : Odds favor that Tuesday should favor the bounce scenario but we need to be on guard as long as gold is below 1075. Short term cycles are pointing up into this week. Even so, there is more work required for gold to turn this medium term downtrend around. Remain cautious.

Watch stocks as well as Crude oil and the action of the US dollar and Euro.

================================

Gold February 8 2010 1 AM EST USA TIME

Throughout this year's gold rally we have always been of the opinion that one thing that had the potential of derailing the gold rally was the fear of debt. While it seems counter intuitive that gold reacts in that manner and I admit that I don't fully understand it either, the fact remains that so far whenever there is a debt panic everything but the US Dollar sells off. We've discussed how debt has gone from public, to corporate and this year to the national level as nations are now being looked upon with great risk seems to spook all markets except the US dollar. This was the same circumstance that propelled the dollar higher in the 2008 rally.

Gold plunged again on Friday but a late day 20 dollar rebound managed to erase the day's losses. The intra-day email I sent out Friday afternoon "closing thoughts" indicated that we should be careful to watch the after hours session once the New York COMEX closed and half jokingly said "once the manipulators" have gone home. Indeed gold's price took off and rallied 14 dollars after hours and the close ----depending on which contract one looks at was just under our key 1070 medium term price area. This also leads to a dilemma of sorts as to how I should view the price close. I've been using the February Futures for my analysis and support/resistance numbers based on the NIFFE contract in New York. The issue I have is that the February contract closed at 1067.70 on Friday's after hours close. We've had the short term trend listed at the top of the page as going to bearish under 1067-1070. While we reached the 1042 area this week as the low (on the NIFFE contract) Friday's late afternoon surge and the subsequent close above 1067 by .70 cents leaves price in a position that could still be viewed as NEUTRAL. While daily closes are important, readers are probably aware that I put much more emphasis on WEEKLY and MONTHLY closes. Certainly there is no debate as to whether prices are in a downtrend or not and for all intents and purposes the triangle that technicians were labeling this decline is no longer valid. Most are now classifying this move as a ABC correction (Elliot wave) while others see price in a full impulse wave down. If the latter is the case, there is more downside coming.

EVIDENCE FOR A SHORT TERM BOTTOM.

Lets go back and look at the MEDIUM TERM projection that we've been highlighting on some of our daily updates since the 21st of January. Because of contract changes, I had to use the April Gold (right side) to compare as the trading has moved out of the February contract. We can see the projection chart (left side) and the actual price (right side) since the 21st has just about played out from a price standpoint as gold got to just about 8-10 dollars of the projection chart. (If your a new reader just scroll down towards the 21st of Jan to get an idea of what we've been discussing). As we can see on the chart on the right, gold does seem to be arriving at some important support where there is a grey horizontal support line drawn from where the October pullback low took place prior to the November rally at around the 1030 area. THIS IS A SIGNIFICANT AREA AS IT IS WHERE THE BREAKOUT TO NEW ALL TIME HIGHS OCCURRED in gold. That grey horizontal line shows the move above 1033 to all time new highs in October and then a subsequent pullback to that area before the BLAST OFF to 1227 during November. Technically speaking this price action is called a "RETURN MOVE" and is a phenomena that is often observed when a market breaks out to NEW HIGHS and then undergoes a correction back to the place from where it began. This is one of the potential technical conditions that is going on in the market now. A return move usually resolves in a bullish fashion. Scroll down for a better perspective.

Below we can better see the action below that occurred as gold has made a "return move" to the initial breakout point (or just about) in price. From this perspective we can consider this area as an important price point and we can see the uptrend line as well as our RED AND GREEN moving averages are just below that channel line as well.

I've also drawn an alternate trend line that takes the intra-week lows of 2008 and projects it forward to show a support line just below the lows of last week. From this perspective we can still view the medium term trend as up.

SUPPORT

Initial support is the 1025-1040 area this coming week. This covers a myriad of technical price points such as the old high at 1033, the October pullback low, the 50 day moving average at 1125 (WE ERRONEOUSLY mentioned a different number last week and we apologize) and the uptrend channel on the chart below.

The only other area of key support is the red and green moving averages at the 993-1007 area.

RSI at same place lows of March and July took place

Price at "return move" levels would be 1025-1145

The question now is will gold support at this area, or will it move lower to the trend line just below the area we hit on Friday towards 1125.

WILLIAMS %R has us watching for a price low.

MACD still bearish.

Technically speaking then a case can be made that gold is certainly at it's most oversold position in quite a while on many standards of technical measure. There is nothing however that says it cannot become MORE oversold before a short term bottom.

CYCLES

From a cycle perspective it is ironic that we mentioned how a lot of newsletter writers have caught on to gold's beginning of month rally cycle and we commented that when the market gets a sniff of a cycle it can often mark the end of that cycle and that it might be as reliable. Sure enough this is the first time we make a new low after a beginning of month cycle bottom since August. We don't think the cycle is going away but it may become harder to trade. Whether gold rallies to mid month or proceeds lower is the big question. There should be at least a bounce from this area but the question is how high. We've already moved 28 dollars from the low. Let's look at a 60 min view of gold using the April contract to see what the support areas are.

We see a long tail on the bar chart below where gold hit a downtrend line on Friday that it has been bouncing off of ever since the high's at 1163. This occurred right near the lows of the day and adds support to a gold bounce. With short term cycles favoring a higher price this week it would seem that the odds favor some type of bounce is under way on the short term. THE GOLD STOCKS (HUI and GDX) also hit important channel trend lines Friday and the gold stocks actually seemed sold out by weeks end also and ended the week with a good bounce on Friday.

RESISTANCE

The bounce from Friday reached exactly at the TINY blue moving average and is gold's first minor resistance area on Monday. Additional minor resistance is the 1075-1083 area. Because of the significant drop last week the rest of the moving averages are still at much higher levels. The 1090-1095 area where fast yellow and tiny purple moving average offers initial resistance and the 1105-1115 area where the red and green averages are represent daily resistance.

WHAT NEXT ?

On Monday it comes down to whether gold can break above the Tiny blue moving average. Even if it does, it would seem that the 1075-1083 area SHOULD offer resistance on Monday as that area was a key support area since December. I've often mentioned that when an important resistance area is broken the most important aspect is what PRICE does directly afterward that counts. In other words now that the market has flushed out the stops below 1070 (which we suggested was probably going to happen last Thursday) does gold stage a rally from this area or is this just going to be a bounce with further downside still to come.

This chart is what makes the Monday call difficult:

Look at the last bar on Friday of last week. We can see how we broke through the white support line and then rallied to the close to rest right on it. This leaves the potential that GOLD (the ETF below is GLD) had a reversal day and a bounce back above the white line will lead to a test of the 106-108 area where the orange down trend line resides. On the downside the next support area is the small lower dashed gold line in the 100-101 area.

Finally -- the best look might be this 150 minute chart. The highlighted area shows how gold is attempting to carve a low here in this area.

Bottom line

As long as gold remains below the 1070 -1080 area, gold will most likely consolidate again on Monday in this area. We may be range bound in the 1048-1180 area for a day or two.

Initial COT reports show a decent amount of short covering did happen last week and the short term cycles are pointing up for at least a few days this week and potentially into week's end. When we couple all of this with the escalating situation in Iran and the increased tensions with China and the USA, the continued evidence that the gold paper market and physical market are at odds and the overall GLOBAL currency concerns of the US dollar and most fiat currencies, the long term fundamental case for Gold is still alive and well. The current situation and how price goes this week will depend a lot on the debt crisis in Europe and how much attention it will be given in the media.

Our best read at this point is a bounce of some sort should be attempted into mid month. If gold remains weak, the bounce will only last a few days and will turn down again. As long as gold is below the 1067-1070 area, odds favor lower. Minor support is the 1048-1053 area on Monday should we consolidate. Monday is a lets see what it will do day as gold attempts to stabilize in this area.

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Gold February 4 2010 10:30 pm EST USA TIME

On the 21st of January Goldtrends printed a chart of what I thought a medium term correction would look like if we got another leg down (original chart can be seen if you scroll down). Coincidentally that day was exactly 30 years from the 875 gold peak price we saw in 1980. Below is the reprinted chart projection (left chart) and the actual price pattern so far (right chart). The red arrow on the chart on the left shows where the projection started from. The whiter portion was the projection made into the future. The chart on the right is the actual pattern that has transpired. The similarities are enough to warrant a reprint today. We can see that the projection chart (left) even had a long range bar included showing the effect of breaking below the 1070 area. Its the price bar right near the end of the projection long in length. Notice the actual chart (right) how Thursday's action delivered the long range bar that was in the projection. In fact the bar is almost exact in length. If the projection we made finishes out in form, the price projection suggests a low near the 1020-1030 area. Could it be more? Yes. Could it be less? Yes. It is only a projection of what to expect when a key area gives way. It is not an absolute. Nor is it soothsaying or some divine revelation. It is a simple technique that I picked up in a book that I read.

What NEXT ?

support

This is the April Gold contract and the hourly chart. I've expanded the price range so we can see WHERE major price support exists under the market. We can see the current downtrend line that gold has been following (Top Aqua line). The next line (Red line) has been touched once. That was at the December lows. If gold were to break down from here the next support area would be the 1120-1140 area. The Red line is around the 1140 area. The horizontal aqua line is the OCTOBER 15th low and it is in the same price position as the Red line. The 200 day moving average is around the 1033 area. The 2007 High was 1033. The breakout that we experienced this year had ONE PULLBACK below 1033. That price low was 1026. Based on all of those numbers is how we come up with support at 1020-1040. Ideally the 1033-1040 area is the stopping point but I wanted to expand it to cover all of the key price points in the bull market leg from September. The next major support is the gold downtrend line at the 970-980 area.

Resistance

The tick chart below shows the Thursday crash. Resistance on Friday is the green moving average in the 1077-1083 area and the Red moving average in the 1090-1095 area.

The big question for Friday is whether gold continues in collapse mode or whether a bounce is in the cards. Only Mr. Market and God himself know. We have the support and resistance area's and the short term trend is bearish. We are not certain what gold has in store for us tomorrow. The potential is just too varied. We could get another route and have just as well bottomed.

If gold were to close at or above 1067 - 1070 on FRIDAY one can make the case that ON A WEEKLY basis the medium term support area we've been using has held on the close and Thursday was just an intra week penetration. Since this is such an important price zone, a close below on Friday will increase the potential that the downside pressure will be the odds favored going into next week.

Bottom line: Barring an all out gap down or another crash type day, gold will probably be range bound tomorrow in the 1150-1180 area. The short term trend is bearish but after a 70 dollar drop in a few days, one would think that a bounce of some sort is due. Regardless, we will price dictate. Lets see if we can establish some kind gold stability on Friday.

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A commentary ..........

In Thursday's update at around 2am this morning, my concern was growing that the rally that began at the beginning of the month had already reached our weekly target of 1122-1125 and that silver's reversal on Wednesday prompted a look at the longer term timeframes. In our weekly update from last Sunday night (click on WEEKLY BUTTON TO REVIEW) we identified what seemed to be a bearish descending triangle and posted an explanation and pattern we got from one of the websites on the internet. I did not try and guess which way the triangle break would be but iterated last night that the short term had been neutralized when the Wednesday high peaked right at the upper line of the triangle and price descended down to the middle of the pattern.

The update suggested that if we were to move below 1077 that NEW lows were probably at hand and that a third test of 1070 would put extreme pressure on that area. Our emphasis on seasonal trends could weaken gold also gave us caution. The biggest clue was silver and it's action. A few astute readers also warned me late last week that a 65-1 gold/silver ratio is usually bad news for the metals and the economy and their insight prompted me to write my timely silver article last night. My hats off to Phil and JDM.

The silver article last night stated that "no one knows tomorrow's" price and that includes me. I had no idea of such a price plunge would occur within 12 hours of that update. One can only weight the evidence in front of him and try and discern the odds. Even then, the lure to follow the crowd is great. A review of the updates on this page has pointed out many times that a cycle peak in the winter (esp. February) is how things usually play out. From a chart perspective we've demonstrated with examples that show when gold hits the upper channel lines that they are most prone to move down to the lower one before corrections end. We've discussed just recently that we should expect gold to test the 200 day average at some point this year. But all of these things are not as evident when price is in an uptrend. We seem to have a tendency to dismiss warning signals and I am not an exception either. Indeed I purchased a small amount of silver at 16.30 last week and GDX and GDXJ on Monday. But by yesterday morning I became compelled to look at silver from a longer term perspective and my analysis led me to sell my silver yesterday which I did report on the SILVER page. On this mornings open I liquidated my gold stocks 5 mins into the open. The reason I mention that is because there is nothing to say that I am not selling at the lows and that gold stocks could be much higher next week. What is important is that I had a chance to exit very close to my entry on Monday. I have a rule about panic. If your going to panic, do it early. Sometimes that can be beneficial and sometimes one can find himself left behind. There is no one rule that one can employ that is an absolute. Indeed if I knew with a certainty where price was going I would be in the Bahamas right now enjoying the sun and enjoying a leisure life.

What it comes down to is knowing where your going to get off the train if you find it not heading in your direction. The one thing that is a great realization is that during the year there is usually only a hand full of good trades that come by. The rest of the trades are usually mediocre, time consuming and to some extent frustrating. Once in a while a rally like we had from September to December in gold comes along. Were it not for those few rallies where a good amount of money is made..........the rest of the trades would render traders broke. If you don't ride the big trends, the small ones will eventually eat you away. But how does one know which one's are the big trends? You don't. That is why for me, if I jump on a rally, or a key area where we are at the bottom of a channel and it is not playing out, I usually don't hang around if there is a channel break or the trade begins to go against me.

Perhaps the greatest lesson imparted to me was a lesson in the uranium market earlier this decade when price rose from 5 dollars to 140 in just a few years. When price broke down, little by little I liquidated my junior stocks but held a mid tier producer that I had been assured by my newsletter guy that was going to be a long term winner. That stock is still trading under $2 dollars and collapsed with the rest of them.

One of the reason I have mentioned all of this is because I receive a lot of solicitation asking for specific entry and exit positions in gold. The problem is that we are all of different orientation and what might be suitable for me might not be for you. I read a few gold newsletters over the weekend and was floored to see the analysts portfolio with some stocks listed that are down 80% from the purchase price yet he holds them and recommends buying more. This is not to say that the stocks won't come back someday, but I think you have to be a certain type of individual who can stomach such a loss and not be afraid to add to positions. For me, I just can't do it. That one Uranium stock was enough for me. But there are others who are perfectly comfortable with this. Those are the real long term investors who buy a little bit at a time but NEVER get themselves extended. In other words they invest a very small amount each time and never let the position grow much more than 3-5% of their total holdings. If it becomes a complete bust the loss is minimal. But to add to a position that is 50% of ones holdings and to average down is usually a disaster in the making.

One reader I have thinks he can log in and say.......ok, should I go long or short here and what's my stop? There is no regard to where we are in the trend. If I say it's not at an area I would buy, he'll say fine, tell me the area and I will place my buy there. What he doesn't realize is that the "look" of the price pattern makes a huge difference. The example I give is this. IF SILVER had just been meandering sideways and not straight down then I might have not decided to sell my silver yesterday. It was the straight down look that had me say, I think I will exit my position and wait for a better opportunity. So for me to say this area or that price without the benefit of what the price pattern was on the way down makes all the difference as to whether I would take the position or not. One final example is today. When asked what price should be shorted at after a 93 cent drop in silver is a very difficult position to answer someone. What if the price opens 50 cents higher in the morning? Then what do I tell him/her? The potential for them to take a big hit is all too possible. Silver has dropped by 4 dollars per ounce since the highs of just two months ago. To short now is difficult because a 2 dollar rally back up before then next move down could happen and silver could still be viewed as being in a downtrend. If one is going to be successful he/she must take the information they have and learn to make decisions for themselves because each one of us is different and each one of us has a different amount of money and a different make up of personality. One guy I know started buying physical gold at 300. I know he wasn't selling today. Yet if you have a big position from 1000 per ounce you might view the situation totally different and justifiably so. There is the short term, the medium term and the long term. Each position or trade needs to be viewed in context. How many times have you bought a long term position only to get out a week later at a much lower price ? Chances are you either bought way too much and could not take the heat or you bought but it really wasn't a long term play you were looking for but a short term gain. If you buy a stock for the long term and your watching it one hour or more per day, it may not be a long term play. Why would anyone look at a long term investment 5 or 10 times a day if it was long term? The only reason I can think is that you have way too much of it for your own good. I tried an experiment and bought a long term stock investment. To prove to myself I only bought 25 shares. I check that stock about twice a month.

There are a few things worth noting about gold. Today's collapse does not end the gold bull market. The problem we had yesterday are still here today. On a long term basis nothing has changed. In fact the global debt problem is growing exponentially and getting worse. When everything collapses because the dollar has had a 6% rally in a few months something is wrong with the system. The only time things go up in the last few years is when the dollar is dropping. And all asset classes trade inverse to the dollar...........together. It doesn't sound right to me. Why is this? Because the markets remain highly leveraged with other people's money or other nations currencies which were borrowed for 1/4 or one percent interest and reinvested. People say how can the dollar rally? It's because the dollar is so one sided that it only takes a small amount of movement to cause an avalanche. And because of the leverage when it begins there is a mad rush to the door. If you borrow the US dollar at 1/4 of one percent and switch it to the Australian currency that yields 3% the return on investment is 12 times over. But what happens if the Australian dollar drops 3% in value against the US dollar ? What is your return when you cash in now? The above example goes a long way in explaining why the FOREX markets trade one TRILLION dollars per day of currency in electronic trade.

How do markets work? Markets are a paradox. At the 1929 low or at the 2009 low it looked like the end of the world (except to a few). Isn't it amazing how someone comes on CNBC and says we are in a new bull market in stocks.........and the next person says that the market is going lower, much lower than last years low. Yet they both have the same information. How can that be? Yet it is. Perspective is everything. How many times have we heard of peak oil? But this time it's different. One famous analyst proclaimed the bull market was over in 1987 and when the market crashed in 2008 they were able to say.........told you.

The point is that each major market move higher requires the majority to doubt it. Recall how many threw in the towel last summer in gold before the big rally. Or how many waited for price to come back so they could get in.

Once there are enough gold bulls who no longer believe gold can go up...or they get wiped out of 50% of their equity....it will begin to go up again.

Over the long term gold will be the ultimate currency and real money. But there will be peaks and valley's during the course of time. Some will be short and fast and others will be drawn out. It comes with investing or if you'd rather.........speculating.

===============

Gold February 4 2010 2 AM EST USA TIME

Gold reached our first objective in weekly price and resistance when it hit the 1126 area today. Last nights bottom line was :

Barring a pullback to support .........the short term trend remains bullish and the next target would be the 1122-1125 area 1133-1136 area on the chart.

Since that high at 1126, a pullback has indeed developed....a mid week one as we speculated would be possible. Tonight the big question is ..............is there one more leg up into next week or did we just see the bounce and its complete ? One thing we do know is that price is still within the triangle. Because of its location so close to the top of the price high, it difficult to ascertain if its a triangle that breaks out to the upside rather than the downside. The trend is NOW NEUTRALIZED inside this triangle and we must wait for gold to either breakout above or below to re-establish the short term trend.

This tick chart of April gold shows that in the very short term the two tiny averages are for the moment below fast yellow. We can see how both averages stayed above fast yellow from 1090 all the way to the top before turning down on Wednesday. Notice how the moving averages were all bunched up at the bottom on Monday morning. Notice how they are all bunched up again right now with price right in the middle. The next move is about to begin.....and remember this is not THE 60 min chart.....its only a 3 day snapshot of gold. We can see that gold is trying to HOLD our old friend 1110 support....and look how price is hugging the gold Gann line for the past session.

Support is 1099-1103, 1090-1092, 1080-1085 and the 1070 area.

Resistance is the 1122-1127 area and the 1136-1147 area. Minor resistance is building overhead too.

What next ?

You name it ....its there. The US dollar after a one day pullback rallied right back up towards the 80 area and the Euro took another big hit Thursday morning.

Price could reverse higher from here ......and continue its expected rally towards mid month or it may choose to pullback and be choppy till the weekend. We're not sure. A MOVE BELOW THE 1077 area would almost confirm that new lows are coming.

Lets get right to it. The chart below is the daily gold chart for April contract. We can see the triangle formation that gold is coiling into. Look how the high at 1126 was an attempt to get through the upper line of the triangle but failed.

WHAT NEXT ? Gold is either going to bust through that line higher or its about to head to the 1070 area again for a test of support. The third test would put extreme pressure on support. Note how the blue moving average and the purple moving average and PRICE have all arrived inside the TRIANGLE. Gold is telling us that it has yet to make its mind up if the next leg is going to be UP......OR DOWN.

We want to emphasize that we are in the portion of the year where gold could weaken even more and that is increasing our caution.

Silver is also worrisome as there was a big pullback today and it is near 16 again.

THIS CHOPPY ACTION IS AN EASY WAY TO LOSE SOME MONEY AS ONE JUMPS IN AND JUMPS OUT.

The great gains from September to December need to be preserved and sometimes it is best to stand aside when there is choppiness like this.

With PRICE IN THE TRIANGLE and in-between the moving averages, the short term trend is moving into a NEUTRAL BASIS.

With the short term cycle's not due to end until next week, the potential for gold to rally higher from here is very possible too.

Price needs to hurdle the aqua downtrend line and then it needs to go after the highs from the last pop in mid January at the 1163 area.

Since we are in February we are a lot more concerned that we normally would be about a triangle correction.

One of the problems with seasonality is that you don't exactly know when it will kick in. But they are an expectation. That is why a contra seasonal move is so fierce as it catches the pros off guard and they must cover and reverse.

BOTTOM LINE: There is no other trend right now in the short term but NEUTRAL Cycles still favor the upside into next week.........but could also complete early. This might be suggestive that gold gets through until the Friday close in a real tight range of trading inside this triangle. So we call Thursday a NEUTRAL day that should test some of our support areas listed and potentially an attempt to get back above 1120.

LETS SEE WHAT GOLD DOES on THURSDAY ---- as price and trend have NEUTRALIZED here.

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Gold February 3 2010 12:01 AM EST USA TIME

One of the things that made trend direction difficult at the end of last week was the switch from the February to April futures contract. We see how Wednesday through Friday was choppy and sideways. The major factor was that we held the 1070 area. We came into Monday morning anticipating whether we would get our beginning of the month rally. At 10:19 AM EST Monday morning our daily e-mail update said this:

"Its the beginning of the month.....and gold usually moves higher...or has done so each month since September. The gold stocks are at key support as well. Resistance is the 1095-1105 area......odds suggest higher today."

The daily email's I send out are just basically my thoughts for the day as to what might transpire for the remainder of the day. Some are timely as the one from Monday. But it is also a backup if my website goes down and once in a while it's an alert as was the one from December 4th when gold dropped below 1200 and I speculated that a trend change was favored.

In last nights update we reiterated our comment from Friday that gold had reached a decision to head for the 1050 or the 1120 area. Last night at 1104, we speculated that the odds favored 1120. Our high today was 1119, just 1 dollar shy of that area. We were looking for gold to digest it's gains on Tuesday but gold would have none of it as pullbacks were tight, compact and the pattern has remained bullish since 9 am EST time on Monday morning when the rally began. So far the end of month low and the new month rally has once again delivered a good bounce. AS IN ALL CYCLES THE PARTICIPANTS CATCH ON. Bloomberg just noted this exact pattern, and so did a few of the newsletter writers. For us it means the potential that this highly accurate cycle for us might be drawing to an end. They usually change once the market becomes aware of them. At a minimum, it will get trickier next time around.

The good news for Tuesday is that Gold did make it to our key moving averages on the 60 minute chart.

If things play out on the short term cycles the trend stays positive until next week and as far as mid month is still a potential. However, PRICE is the most important aspect and is our focus tonight and we'll try and keep it simple. I am preparing a MONTHLY LONG TERM report for both gold and silver that should be ready in a couple of days.

Tonight's 60 min chart of April gold shows that when Monday morning opened up things were nice and quiet in the 1180-1185. Between 9 and 10 am EST, the rally began and within five hours gold had reached 1100. Now although we were looking for a consolidation on Tuesday and price instead went up, a close look at the chart shows that the last 24 hours only had a TWO hour period where price rose from 1105 to 1115....where we are now in price. The other 20 bars were sideways and consolidating.

If you look at the last 10 hours you can see how well the moving averages are converging with price. Look how price is right in between the red and green moving average consolidating and waiting to make its mind up whether we pullback to midweek towards the 1100 area or move up to the next resistance. Lets discuss the bullish aspects. Tiny Blue moving average has crossed Tiny Purple and fast Yellow and Tiny Purple is ready to cross Fast Yellow. I went back to August and the data shows that when both Tiny Blue and Purple averages are above fast yellow, the odds favor the upside. However, price can sometimes come down to where these averages converge in price. So while its a bullish development it doesn't answer whether price pullback over the next 24 to 48 hours will come down to that area. Lets scroll down and look at where the most likely support is for very short term gold.

What next ?

The rally is on......as you can see below, we are at key area. The next resistance if we break out above the moving averages is the blue GANN line above the 1130 area. This is also the are of the spike lows of Jan 8th and Jan 14th. THUS key resistance would be 1133-1147 (1147 BEING WHERE THE LAST HIGHS OF JAN 14 AND 18 were)

Support is the white areas on the chart.........1099-1105 --- 1087-1095 and then 1070.

The pattern looks very strong so far. Rebounds in a downtrend can be like that.... but so can rallies off a MAJOR LOWS at a medium term price area like 1070 is. The question then becomes are we still in a downtrend ?

That 1070 area is what separates the downtrend from the uptrend on a medium term basis. SO WHILE we don't know for sure.........we can see that in two days we erased 10 days of lower price and price has reached our key averages (green and red). That tilts the odds as bullish but PRICE now needs to exceed these averages next.

The short term cycles seem to still have juice left as well. We also discussed yesterday that a pullback in the US Dollar was due and that seems to have started.

What Next?

Moving above the red and green averages and 1122-1123 would favor gold to move to the next resistance area of 1133-1147. With a 40 dollar rally behind us in two days.........a pullback form this area could develop to one of the highlighted areas. A mid week peak and pullback certainly is within the realm of potential. The pattern thus far LOOKS GREAT .........and when they look this good........the chance that it can move higher with only minor blips like we saw on Monday and Tuesday is also very possible.

BOTTOM LINE Barring a pullback to support .........the short term trend remains bullish and the next target would be the 1122-1125 area 1133-1136 area on the chart. Only a move below last weeks low would derail the rally.....but so would a drop below 1078-1085. THE MOST LIKELY spot for a pullback low (if we get one) would be the 1099-1106 area where the pullback low of Monday (1099) and the Gann 1X1 fan line is (1105). There is also support at a whole bunch of mini Gann lines in the 1085-1095 area. So there's a lot of support areas below 1100. As long as we are above that white circle near the fast yellow moving averages.......odds favor a rally is under way toward mid month. If gold acts like it has been, the majority of the short term move will occur by Feb 10th or 11th. Whatever way we break on these moving averages (green an Red) should set the tone for Wednesday.

=================================

February 2 2010 12:20 AM EST USA TIME

In last nights update and the weekend update we noted that the beginning of month rallies as well as our cycle low that was due this week again wasted NO TIME as February was kicked off with a good sized gold rally. Gold got within 2 dollars last week of breaking below our 1070 area in the futures and within 4 dollars in spot. As we stated on Friday we had arrived at the time where gold would either deliver another leg down towards 1050 or a rally towards 1120. For the moment, it looks as though gold has chosen the latter.

The odds have slightly increased the potential to rally to mid-month again. But it is important to realize that the current correction is a MEDIUM term correction. So lets look at the weekly chart again as we are at an important medium term area. I've zoomed in the weekly chart tonight and you can see the bounce we got today. As you can see on a weekly basis this is only a bounce so far. However the bounce came at our MEDIUM term support. From this perspective, ONLY a move below 1067-1070 gold would usher in a new leg down. In the GLD etf that would be the 104-105 area. So moves below this area is where A LOT OF STOPS ARE AT NOW and that's where they need to be for short term traders.

Now lets scroll down and look at the shorter term.

what next ? So far we are only on a one day bounce but the rise was steep and wiped most all of LAST WEEKS RANGE and that is usually bullish. Right now we can see that gold is pushing up against a BLACK downtrend line while trying to hold the yellow moving average. Pullbacks should be limited to the green moving average or just below where tiny blue and purple moving average near 1090. Tiny blue will be crossing over purple for the first time in 10 days and that's a good sign. Tuesday's battle will be to get above the black downtrend line and if it does will most likely encounter resistance at the red and blue moving averages if the rally were to continue. It's more likely we will see a consolidation Tuesday where gold and silver would pause and possibly do a little testing below 1100. In either event today's move seems to be the first good shot to reverse the short term trend out of bearish mode and open up the potential for a mid month rally. WE WILL BE STUDYING FEBRUARY price patterns over the next day to look for clues.

BOTTOM LINE: The beginnings of a Feb rally are in place, but lets NOT GET CARRIED AWAY and bet the house. We need to keep in mind that we are going through the first MEDIUM TERM CORRECTION in gold for quite a while now and even though we've bounced at key support, price has not confirmed that we can officially say the CORRECTION is over and new price highs lie straight ahead. So lets remain on guard just in case.

Traders who ENTERED this morning.....will have STOPS below 1067- 1070 on those new positions so any price break there would usher another short term leg down. While we're not looking for that to happen on Tuesday, in summary we still need to remain cautious. Gold will still have to HURDLE the moving averages above to get the Short term trend going. This may take a bit of work on gold's part. Odds favor consolidation on the Tuesday.

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Gold February 1 2010 2:00 AM EST USA TIME

There is no change from Friday's report. Click on the WEEKLY button for a full review just written early Monday morning.

We are testing the key 1070-1075 area and is very important to hold. Moves below 1067 could spark a drop of 30-40 dollars. A short term cycle low is due mid-week. Gold has rallied to begin the month since September. Let's see if February has this in store.

Click on the weekly button for a full update.

Gold January 29th 3:00 AM EST USA TIME

A few weeks back we discussed that the week of January 21st would be the 30th Gann cycle anniversary of the gold top. Just as the stock market buckled exactly 10 years and 1000 points from its top a few weeks ago, gold has gone into a severe pullback. Last nights support of 1070-1075 held as the low was 1072 and as we've suggested gold is on the ropes and the odds favor lower. We been in a massive congestion period this week back and forth from 1080-1100 for the most part.

Let's get to the heart of the matter.

Will this be turnaround Friday for Gold as it has done during the bull market of the last few months ? Right now we are in a potential medium term sell off and decision point time is here.

Let's look at the projection we did 9 days ago as to what a medium term correction would look like and see where we are tonight. The chart on the left is the projection from 1/21/10. The chart on the right is the market updated since then. LOOK HOW CLOSE TO EXACT IT IS PLAYING OUT SO FAR.

While we don't expect it to be exact, should GOLD FAIL THAT support area where price is sitting RIGHT NOW, the chart on the left SHOWS a long range day down should be expected towards the 1040-1050 area before we bottom.

Support lies at 1070 - 1075 followed by the 1040-1060 area for Friday. We arrived at end of month and time and price should be ready to deliver either a rally from this area towards 1120 or a sell off towards 1150. Velocity and momentum favors the downside.

Bottom line: A break here can be significant. Gold has been trying to hold now for 6 days. Tonight it looks like its about to roll over. Barring a bounce, odds favor the downside. We are at a key medium term standpoint. We suspect a good sized move is going to develop. The potential for gold to wait till Monday to make a move is also possible. Lets see which way they send gold on Friday. Odds favor lower.

Gold January 28th 1:00 AM EST USA TIME

In yesterdays update we listed that the seeds for a metals reversal day (especially in silver) was observed. However it was not to be the case. Gold's initial resistance all week has been 1099-1104. This area is just barely 10 dollars above last Friday's close but gold has not been able to penetrate it even once so far this week as Wednesdays high was in the 1102 range again.

But our consolidation forecast for Fed day was certainly right on. Check out the chart. Impossible to day trade but the Wednesday close below 1090 was the lowest close of this January correction.

This has rendered the short term trend NEUTRAL until a significant break of this area takes place.

Lets get right to the heart o the matter.

Last nights bottom line forecast for consolidation into the Fed meeting has played out as we basically went north and south of 1090 and ended the day near there. We said there might be on potential head fake and we seem to have gotten that tonight. Let's zoom in on the 15 minute chart.

The red arrow at the bottom right of the chart shows that gold dropped to the 1078 and has quickly bounced back to the 1088-1090 area. We can see on the chart we have now bounced off of the 1085 area three times since yesterday. This latest penetration and subsequent rally back to 1090 is short term make it or break it area.

What is the chart reading tonight ?? In a word.....BEARISH. The pattern from the mid month high looks bearish, all the moving averages are down and the potential to break lower is knocking on the door step. While we are expecting an en of month low, cycles are not the number 1 factor. PRICE is. In times of extreme weakness short term cycles can be as much as 3-4 days late. With that said, gold has gone through options expiration and a fed meeting. The question comes down to this --- IS GOLD ready to move lower or higher again ?

On a short term basis gold is over sold and due for a bounce. Be we are not just dealing with the short term, we are dealing with a MEDIUM TERM correction as it now stretches into its eight week.

We can see the mass consolidation and choppy price action we have been under this week above. Notice the tiny Gann line we've been bouncing off of. The Thursday morning session has broken it and price has now rallied back to the line. We view this area as important because below this area lies another leg down of at least 20-40 dollars with the potential for more. Let's zoom out.

The three arrows are the head and shoulder pattern that we brought to your attention on the 21st of the month. Notice how the left shoulder peak was right at the red moving average.....and the right shoulder peak was right at the fast yellow average. Twice gold tried to break thru but could not do it and literally buckled. When it broke our white horizontal pivot line, look how t came back and touched the underneath of the white line and buckled again to he current area we are in now of MASS choppiness and consolidation. And rightly so as the lows of DECEMBER is just a SHADE AWAY. This is a MEDIUM TERM BATTLE of the bears and bulls.

We've been discussing an end of month low. But right now our concern is the December low and how close we are. We've discussed how January's are usually a month of a high or low close. We know what this month is.

Support is the 1070-1075 area followed by the 1020-1050. Resistance is the 1103 - 1110 area and the 1117 to 1125 area.

Readers today informed me that the gold/silver ratio reached the 65/1 level. There is sufficient data to suggest when this area is reached......that all assets are usually favored to decline. AND THEY all area except the dollar.

We are approaching a point where the MEDIUM TERM TREND IS ABOUT TO GO TO NEUTRAL as a function of the loss of momentum and breaks of the December lows by much more than 20 dollars would do the trick.

Lets discuss again the Medium Term Potential leg down if gold breaks .....

On January 22nd Goldtrends posted a chart of what the pattern would ideally look like if we were to get a medium term CORRECTION in gold. The chart on the left is the projection where the white area begins.

The chart on the right is where we are so far. Notice how similar that pattern is so far. The point is that gold is approaching a price zone that if gold breaks below it we could see a move down in a big long range day where the lower aqua channel line and the white horizontal line in the 1020-1050 price zone. Lets watch carefully as this is where the break....(IF IT HAPPENS would be this area). AS OF TONIGHT --- IT HAS NOT HAPPENED --- As you can see on the daily chart.....we are at the last real key support area in gold until the 1020-1050 level. This area and the current vicinity we at is where gold needs to turn to avoid this next leg down.

Let's fast forward to the Euro -- a currency that we are bearish. The US DOLLAR IS THE OPPOSITE.

The Euro is near the long term moving average at 138. We should expect some type of bounce here.

The US dollar is also at a key 5 week medium moving average.

THE BULLISH SIDE.

WHAT NEXT ?

Gold needs to make its stand here at 1070-1075. IF gold were to bottom here we could expect a test of the 1125-1150 area going into February. Friday has been gold turnaround day in the past after the fed. The drop that we got in the far east........had it been in New York, I can imagine there are a lot of stops in that area.

On the bullish side, there is a cycle low due in gold right in this area. There are many key indices at their 200 day average. Note GDX cut a hammer at the 200 day average today and the HUI is also at the 200 day.

We've discussed a few weeks ago that sooner or later we would go visit the 200 day average in gold. We are already there in stocks.

FINALLY --- THE SEASONAL TREND ---------

We can see that we are approaching what is usually the final THRUST for gold and that the PEAK FOR GOLD GOING INTO MARCH IS DUE JUST ABOUT NOW. The top of the chart is the futures contract month, and the bottom of the chart is TIME.

IT looks like when the February contract gets liquidated, a lot of times a big drop develops.

Over the past few years, and at other times, gold keeps rallying to the middle of February. Occasionally, a bit longer. While anything is possible the BOTTOM LINE IS THIS:

If gold rallies from here.............and failure and subsequent drop below this area would warn of gold's correction extending all the way to the March timeframe. A test of 950-1000 could very well be in the cards.

ANY FAILURE HER IN GOLD ............SAME THING.

WHAT NEXT ??

SHORT TERM TREND:

WE CAN ONLY WAIT FOR GOLD TO MOVE OUT OF THIS CONSOLIDATION:

BELOW 1080 AND THE ODDS SHIFT TO ANOTHER LEG LOWER.........

ABOVE 1095 AND GOLD IS IN NEUTRAL ZONE.........

ABOVE 1110 and GOLD IS IN SHORT BULLISH MODE.........but over head resistance is close by at the 1122-1125 area.

BOTTOM LINE:

The next short term move is about to develop......... with potential for more on either side.

SHOULD GOLD BREAK LOWER --- a medium term correction will be on. There are cycle lows that are due between Now to Feb 5h. We can only watch to see which way gold goes out of this congestion.

Until we see the end of month bullish cycle appear odds favor the downtrend. We are awaiting it, but a break of support....and gold will see another leg lower.

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Gold January 27th 2010 1:15 AM EST USA TIME

Gold and silver gave potential reversal day characteristics today, especially silver. Gold double bottomed today within an hour of each spike at the 1085 area and bounced right back to the 1095-1100 price range. Of the two charts we listed the pattern played out Tuesday of a bounce to our first support area of 1099-1104 area registering a high above 1102. As far as the downside goes, we stated that there was minor support at 1095 but the only SUPPORT we saw on the chart before the lows was the 1082 area. The 8:15 am EST time print of just below 1085 came within three dollars of that "only" support and after the double bottom staged a 20 dollar rally to the upside to our resistance.

Odds are increasing that the short term correction.........and potentially the medium term correction is coming to an end. We'll address the short term tonight specifically.

Options expiration is now out of the way and the boyz were able to pull gold down almost 85 dollars since the mid January peak. They crunched it below 1100 today to render a lot of options worthless. Coincidence ? That's some coincidence..........now 4 out of 5 months during this rally. The Fed meeting ends tomorrow, and if gold keeps playing and doing what it has been, a short term low should develop between now and Friday. I've more than once mentioned TURNAROUND Friday has been a hallmark of this bull market and this Friday might do it again.

Gold's ability to hold the 1070 area is opening the potential here for a rally to begin going into mid-February.

The chances for a short term bottom have INCREASED significantly and the odds are shifting that a key monthly low might be in place or is very near. Silver STOCKS are off 20 to 35% and might pose a good buying opportunity and the gold's have pulled back a good chunk as well.

When we look at the cycles and turning points for the year there are a number of possibilities for the coming few months. RECALL that we've discussed that the best time to buy gold stocks is NOT THE WINTER TIME. But that is the odds..........not the absolutes. Gold and silver usually don't top until Feb/March. The fact that they did in December opens up a host of potentials. Let's discuss them briefly.

1 The metals rally one more leg up into Feb/March and then a spring correction takes hold.

2) The metals stay in a trading range this winter until the spring where another leg up develops.

3) The metals rally into February but fail in mid month and produce a March low at or near the 200 day average in gold.

It's not going to be an easy road to navigate but as each clue unfolds we try and follow it to the best of our ability. For now..........be on the WATCH FOR A POTENTIAL LOW and RALLY ATTEMPT GOING INTO FEBRUARY.

Lets take a look at the chart and see what's going on. Look at tiny purple moving average. It has been below fast Yellow average ever since the middle of the month when the price broke. As you can see on the chart below price and the tiny purple and blue averages have converged.....RIGHT AT OUR KEY 1095 area.

As we look at the chart right now.........the potential for a continuation pattern lower for one more dip has just as good a chance as a bottom. We are alerting you tonight that the possibility of a bottom formation is just such a possibility for the first time in two weeks. This would play WELL with a month end bottom and a Friday recovery rally in gold as we have seen. Note how the GANN lines we've put in our chart has served us well. For instance today's action was in between the blue and white fan lines. THIS AREA IS IMPORTANT as a resumption of the downtrend into next week would come into play and the potential to move a good 40 dollars lower would be the odds favorite. Today's FLUSH OUT in silver was dramatic and is usually the harbinger of a metals turn around and rally is coming into the forefront.

One thing is pretty certain at that would be a good sharp move is near developing --- one way or another.

MAJOR support is the 1070-1090 area and it would TAKE CLOSES BELOW that area to suggest we have another leg down. Initial resistance remains as we have had it all week at 1099-1104 and 1115-1122. The fast yellow moving average (allow a few bucks of penetration) would be the ideal minor resistance for Wednesday.

What next ?

The tightening effect announced by China as well as the growing national debt of so many countries in the spot light has been too much for all markets of late ---except of course the US Dollar. This game played out during the crash as you all know. Then it was financial institutions ....this time its nations. This is the only show stopper we've seen in gold's bull market and we need to keep it in mind.

SHOULD GOLD BREAK BELOW THE LOWS established on the chart above, another drop to the 1060 area could develop right away. The next short term move is getting ready to develop. Once the Fed announcement is out of the way (barring a quick spike down to flush out some longs) odds are favoring a short term bottom is near and a rally attempt would come into favor.

BOTTOM LINE: Odds favor a consolidation into the Fed meeting.......and potentially a ONE HEAD fake in price. In sum, we should get prepared for a rally to commence sometime in the next few days.

Gold January 26 2009 12:01 AM EST USA TIME

In yesterdays update we identified two key areas (chart on left) -- the 1099-1104 area (red lines) and the 1115-1122 (oval area). The lower area potential so far with it's price pattern has played out. Unless gold takes a stand here, yet another leg down from here could develop in the very short term.

The downtrend remains steep and many commodities and the stock market have joined the downside. One by one markets have been joining the downside ever since the US dollar bottom. The metals were the first to react in December, then the Grains joined followed by Oil and now the stock market. It is never a good thing when stocks sell off on good news and we are beginning to see that as stocks rally into good earnings reports and then falter and that is what we have been seeing in the stock market. To make a long story short, since the China announcement that they will begin to tighten, and the media is jumping on it, the global financial system has gone into a tailspin and markets have quickly erased all of their 2010 gains. As we move into Tuesday, the gold market continues to struggle every time it climbs above the 1100 area in gold.

Resistance is the 1103-1106 and then the 1115-1122 area for Tuesday.

The fast yellow moving average is now crossing below the medium green and slow red moving averages....a bearish scenario. Price is bouncing around the 1X1 line as gold continues to struggle and battle to establish some type of support near 1095. Gold will need to move above this area soon if it is to hold as the support areas will not take much more of this without breaking lower.

In addition, we've now had 2 key failures at the 1103 area.

For now, the only support we see on the chart is the 1082 low from last week and some very minor support at the 1095 area where the fast blue moving average resides. Beyond that are we're looking at the 1070-1075 area where a break there could bring another leg lower and extend this downtrend that from a medium term basis began in December. The continued pressure to the downside and the chart pattern remains bearish for all intents and purposes as the only technicality is a close below the 1090 area. As we've stated above, if gold doesn't move up soon, we should soon see.

What next ?

Markets remain under extreme pressure and unless gold makes a beeline above 1100 another led down is about to develop.

With the fast yellow crossing under the green and red averages, the short term trend is has been reverted to bearish at the 1100 area. The very short term consolidation period is nearing an end and direction should just about be ready to resume.

Bottom line: Barring a bounce towards 1106 - 1110, or 1115-1122 the trend remains down. Medium term support is the 1070-1090 area. If we have not yet bottomed the next low point would be near month end.

=====================

Gold January 25 2010 1:00 AM EST USA TIME

Our last update gave support at the 1084-1090 area as support. Friday's low at 1083.80 (just 20 cents off our lower end of support) prompted our Friday email update to suggest a potential low had been reached and odds favored a price rise bounce from there. WE DISCUSSED on our last update the possibility that gold could be setting a short term low at the key dates that we've been waiting to unfold.....the 21st and 22nd. We mentioned this possibility for the simple fact that once again, one of our price objectives have been reached.

At a minimum we think the potential to bounce to the 1106-1110 area, or the 1117-1125 area has potential. If its the higher area, we would expect a bounce to late Tuesday early Wednesday morning and would review he situation from there. If the bounce is only into the 1106-1110 area we would expect a Monday bounce only and then retest of the 1085-1095 area going into Tuesday.

I want to share just two quick charts tonight, and we'll pick it back up on the next update. This 60 minute chart of Feb gold shows an AQUA oval at the 1117-1123 area in gold. MOST IMPORTANT IS THAT ALL THREE MAJOR AVERAGES ARE CONVERGING THERE WHERE THE WHITE HORIZONTAL PIVOT LINE IS. This would seem to be a very strong area of "draw" for gold and the potential for gold to head there this week is a strong possibility.

When the moving averages all converge in this manner the gold price usually is drawn there and a battle for the short term trend usually develops. With the US dollar having tested the 200 day average on Friday and the Euro due for a bounce, the potential for gold to move to this area is clearly a potential for this week. The second choice is the 1106-1110 area where one of my weekly moving averages currently resides. The weekly chart is not shown, but that area is the 1106 ish area. If that were the case, the small red extension lines I've added to where price is could be another potential over the course of Monday. We favor that one for Monday, but feel that a three day bounce overall into Wednesday toward 1120 also has merit. The fact that the Friday after hour close at 1094.50 left us right where we were looking (1090-1095) AS A key close area was just too close to get a reading on whether we have another leg down. THE technical community is now almost unanimous on another leg down in gold..........and while technicians certainly have reason to forecast that, we always get concerned when the majority favor such a move.

what next ?

Odds favor a bounce off the Friday low.....as we can see that there is already a consolidation in play. We thing the majority of the day could be testing the 1106 and then getting some choppy action like we've seen on the chart recently. Let's see what gold does at these resistance areas.

Bottom line:

Look for tests of resistance and support on Monday.........probably 1106 and 1090 ish.

One final chart tonight that might be of interest..........and it has bullish overtones.

The potential for gold to double bottom here and stage a strong rally in February remains a possibility that until we close below 1070, we still cannot dismiss. For this potential to come in to play we need to get back above the 1115 area, but more importantly above the 1150 area and the upper aqua channel line.

Lets see what the pattern looks like on the bounce so as to better read the potential.

Bottom line

Odds favor an early week bounce...........1106-1110 area. Support is the 1085-1095 area and the 1070-1075 area.

===============

Gold January 22 2010 12:30 AM EST USA TIME

Gold was once again under pressure on Thursday and initial support gave way during the London session ..... and finally reaching our key weekly support of 1070-1090 in the latest part of the day touching the upper end of weekly support at 1090 (1088) was the low. Our intra-day email gave resistance at 1103 in our update and gold reached 1104 before pulling back. Today's close at 1095 and change was right at the cusp of a most important price area.

A Friday close would add to the bearish picture for gold.

Support is the 1084-1090 area........and 1095 is like a MAGNET right now as price is vacillating near that area as it tries to recover and stabilize from the drubbing it has received.

Our outlook remains on track for an end of month low. We've been targeting (with a little help from my friend Mr. Cate and Mr. Burbach) the 21st and 22nd of this month as KEY DATES. The action in the stock market, grains, oils, metals and everything else bring a lot of validity to this target date.

One thing to watch for is that gold and stocks have already made fresh new lows as we enter Friday the 22nd. Is it possible that GOLD and Markets are making a LOW PRICE PRINT HERE at this key date? We know its only been a few days since the peak, but we find it interesting as well that prices are already at new LOWS as the 22nd completes. For those of us looking for lows into the end of the month.........it's worth keeping this in mind over the next few trading days should gold begin to support at this key area.

On tonight's chart we can see the major break and GAP DOWN from our head and shoulder pattern and that the price break has been done in IMPULSIVE fashion from a chart pattern standpoint. This is the most bearish aspect of this drop. It is dramatic from a VELOCITY standpoint and is a dangerous situation in the fact that it is warning that the pattern we have been in is most likely a medium term correction that has the potential for a price drop towards the 1000 area before all is said and done.

What next ?

We can see how close we are to the lows of December and how price has reached our 1070-1090 support area. Look how price has twice tried to bounce at 1090..........trying desperately to form some type of short term bottom. We can also see how all three major moving averages are dropping close together in a race toward our old support area of 1115 to now make a stand at MAKING that area KEY resistance. This is confirming that our key price areas remain relevant. Key support at 1070-1090 remains the key and we should not be surprised if we get a gold bounce somewhere near this area. Friday's have been notorious for reversal days up so for those who are short --- keep that in mind. We've also dropped 50 dollars in just a few days and this is another area where we feel makes this market ripe for a bounce. But make no mistake the gold trend barring a bounce still has the downtrend as the ODDS PREFERRED direction.

Since this is such an important price area, we expect gold to try and bounce towards the 1100-1110 area in a counter trend move on Friday. One of the reasons we feel this way is that our forecast last night of the US dollar rallying to the 200 day moving average has already been achieved. Odds would favor a few days of consolidation in that area for the dollar. Our key weekly moving average in gold is 1106 and this is the first time it has been broken since LAST AUGUST. It is yet another indication we are in a correction of medium term proportions. Friday seems to be a day where gold will vacillate to and fro near the 1095 area.....launching attempts above and below. At some point during the day making an attempt at 1100-1106, and possibly 1110-1115. A quick look shows the last spike lows from December at 1075 and 1082 from the 12/23 date, and 1085 from 12/23.

Bottom line: Odds favor a consolidation and choppy day with gold fighting to stop the drop in between the support and resistance listed above, maybe even get a bounce going. But with the trend this strong on the downside, extreme caution is warranted. Each bounce so far had its legs cut off pretty quickly. Barring a bounce odds still favor lower.

WHAT WOULD A MEDIUM TERM CORRECTION LOOK LIKE if we break from here and where is the next most likely stop ???? Scroll down.

The markets own projection of this current correction....................

The chart below is a DAILY CHART projection of the potential correction we are going to see into the beginning of February should we GET A SELL SIGNAL below the 1090-1095 area. Based on the current projection a move to the 1020 area would be in order going into the first week of February. Since it is a projection it should be treated as such. It is being provided as a guide for what an ideal medium term correction would look like and what we could expect IF ----- we get a break of key support. A pattern of this type would be the odds favorite. (it was created on 1/21,before today's action)

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Gold January 21 2010 2:26 AM EST USA TIME

Yesterdays update discussed that the next short term move was due to begin and our odds seemed to be skewing to the downside. In a disciplined manner, we wanted to see price make a lower low (see insert chart below)

Our discussion earlier this week on a head and shoulder pattern having formed (the two little arrows show the shoulders) was a bearish chart pattern that deemed watching. Gold's inability to penetrate the 1145 area and our discussion of the importance that price was now trading below the yellow moving average (see below) and the mid month expected peak....particularly on the 21st or 22nd had us ready for a pullback today. What was surprising for the second time in a week was the long range of the drop again today.

The head and shoulder pattern was too much for the shorts to resist and when the neckline or shelf support (long red arrow) the selling pressure accelerated right down into our deepest and final short term support area. If you'll notice the short term trend reading at the top of this page had a neutral on a close below 1110 and a bearish on close below 1106. The low for the day was 1106.90 and the close was 1110.80 (the 5 pm close).

Thus the gold market stretched out its maximum draw down coming 90 cents from a sell signal on the intraday low and 80 cents on the closing price.

SO LETS PUT IT ALL IN PERSPECTIVE BY ZOOMING to the daily chart below.

First off, the correction must be taken in perspective. As you can see when we view the chart in this context this down turn on Wednesday is still within a context of a large wedge (see the gold lines meeting up). From this perspective, gold has STILL NOT MADE A LOWER LOW on the daily chart. But there are certainly some bearish aspects. We see that price is no higher today that it was in mid November and that for the first time since August, the blue moving average is SLOPING DOWN and price has only been able to penetrate above it once............on the exact day of the monthly high at 1163. The point this is all making is that the momentum (for the moment) has slowed in gold. Now on the other side, as you can see, Aug, Sept, and October all had a rounded peak at mid month in price....and always has pulled back in to month end. It was this pattern that assisted us in calling for a mid month peak and a pullback to month end in our forecast. With today's action that process seems to be underway again. What's the bottom line here ? Well, the gold market is going through a NORMAL CORRECTION. It's doing what it has been doing for most of the bull market. We can see from this perspective however that gold is coiling up here in-between these two gold lines as it reaches the apex where the lines meet. A medium term decision point is arriving for gold.

The circles/oval represent the support area's for gold should a pullback continue.

There is the short term and there's the medium term. In this price area gold is making MEDIUM term decisions. The biggest clue we have for that is the fact that the DECEMBER high hit the long term 21st century trend line (the top aqua line on this chart). This channel is our HIGHEST line on the long term charts and can be tied to the 2006 and 2008 highs....each of which proved to be the highs in gold for a good amount of time. Therefore, it's a major factor we must watch.

WHAT IS IMPORTANT TONIGHT ? ------ if this pullback in gold this week is causing you angst might it be that you have TOO BIG OF A POSITION in your portfolio ? There is no REASON other than TOO big a position if you really think about it when one is in angst....regardless of how much profit your giving up, or worse, how much your loosing. We've discussed another issue in the weekly update from last week and it is this: ODDS FAVOR THAT GOLD IS GOING TO TEST THE 200 DAY MOVING AVERAGE this year. I'm not sure exactly when.....but the odds favor it. Investors should consider if they are prepared for a move to the 1000 price area in gold................where the 200 day moving average resides. If gold moved to that area.................WOULD YOU HAVE CASH AVAILABLE TO ADD TO YOUR POSITION or would your portfolio be hemorrhaging ? If neither that's ok. But if you think about it......long term investors should have cash to work on pullbacks. When gold was 2 standard deviations above the 200 day average in December, that was a time when one should have been pruning and taking some profits off the table. That is if you wanted to have cash available for the next dip. The two circles and the oval shows the support areas for gold on its way to 1000. If gold were to do a normal thing like go to the 200 day average (for the first time in almost a year) that lower circle shows how much further gold has to drop to achieve it.

If your not in a position to take a move that low in gold.........there is really only one thing that should be done. USE STOPS. If you don't then you are prepared for a move that low. When you think about it, that is the decision you are going to make..............because sooner or later, the market is going to force that opinion on you because it will return at some point to that average. You will either have stops, or you will ride it to the low. Now it may be later and it may be higher form here. The point is we must always respect the markets ability to pull back to the 200 day moving average. It's good to keep that in mind. Our last weekly update touched on the best time to be buying. Check it out if you haven't already.

Most of the time, gold doesn't peak as early as December. It usually takes until February. In my research over the last decade, the January/Feb/March price highs are not usually that far apart from each other anyway. The thing that makes it difficult this year is we are experiencing A MAJOR BREAKOUT IN GOLD and we all want to be along for the ride and some of us are RISKING more than we care to talk about............having a lot of our "beans" in one pot. If that is the case, it must be managed. BECAUSE THERE IS NO DOUBT THAT THE POTENTIAL FOR GOLD TO RALLY TOWARDS 2000 dollar and maybe higher is certainly a real possibility. But we area going to have corrections along the way.

What next ?

Thursday is all about gold getting up and staging a rally from here back above the 1115 - 1125 area. The rallying of the US dollar and the collapse of the EURO is at center stage in this situation. Let's have a look at the dollar.

WHAT IS A TREND ??????????? SOMETHING THAT IS REPEATING. THE STRONGER THE TREND THE MORE REPETITION. Of all the commodities currencies have the longest lasting trends. The dollar is now above the September high of 77.47 and is in a bullish mode. The EURO weakness is the main cause.....but gold is being effected.

RSI is showing strength.

A test of the 200 day average is next.

(red arrow) ANOTHER LONG RANGE DAY (bullish)

The US dollar has consolidated in a bullish fashion. The next leg us seems to be started.

(red arrow) Long range day. (bullish)

In rally mode.

MACD close to turning bullish.

The dollar remains in bullish mode for now. The next resistance for the dollar is the 200 day average and then the 81.50 area. Players who are heavily short must at least be starting to feel uneasy. The next cycle peak for the dollar is the END OF THE MONTH.......or the very beginning of February.........and pretty much what we've been seeing in gold but the opposite.

Now let's look at GOLD ---------------- it has pulled back as the dollar rallies (and the Euro tanks). While not the only reason...........the highs in the Euro are in line with the news (DEBT PROBLEMS) with Greece. The debt is no longer the US and UK. Iceland, Greece, Spain, Italy................the concern is shifting this year from corporate and private debt...........to National debt. Not that the other two have gone away, they are just not as much in the spot light. This weeks blow came when China was going to tighten it credit. Can you imagine the sea change that IS GOING ON ???? China decides to tighten and gold and the dollar respond. It seems when China moves now that markets have gone from a YAWN.................to a YUAN.

The 60 minute chart below shows gold is clawing it's way back up towards the moving averages....or it is attempting too. There is one point we want to make about the moving averages. While the green and red moving averages did no provide their usual support..........their importance and interaction can be seen below. Look how price made a RARE INTRADAY gap ...........RIGHT at the moving averages. Look how price opened up exactly below the moving averages and then tanked from there.

Initial support is the 1100-1106 area followed weekly at 1170-1190. Initial Resistance is the 1115-1125 zone and daily resistance is the 1135-1145 area. ONLY A MOVE ABOVE THE 1145 area would relieve the bearish pressure.

Due to the fact that we are below all moving averages now in conjunction with an odds favored lower price into the end of month and a long range day...............the short term trend indicator from a risk basis is no longer in BULLISH mode and is now shifted to NEUTRAL at the 1117 area just after 2:01 am.

BOTTOM LINE: Technically, gold did hold the 1106 area today.......the number we had listed as bearish if we closed below it.

Once this bounce is complete we think that Thursday will be a day where gold is trying to hold support most of the day.

The short term trend is revised to neutral, and a close below the 1090-1095 area would flip the trend to bearish.

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Gold January 20 2010 1:11 AM EST USA TIME

A quick review of the updates since 1/12/09 shows we've been pretty much neutral in our short term forecast looking for choppiness and consolidation and forecasting neutral days. Here's the hourly close on the 60 min zoomed in chart since 1/13/09.

Last nights update was looking for a test of initial resistance at the 1140-1147 area.....and we ended up with a high of 1141. On the downside we were looking at initial resistance at the 1126-1131 area. The low came in at 1128 at 8am on the New York COMEX. The charts zoom in really gives a great shot of how the moving averages interplay with each other even in a tight range. We can see on the first half of the chart how when price was bouncing above and below the yellow moving average how the tiny purple and blue moving averages were providing a guide to support and resistance......with tiny purple above and tiny blue below. Then as the FAST yellow moving average became resistance in the latter portion of the chart, we can see how tiny purple and blue pulled below the yellow moving averages. NOTICE HOW TINY blue only made it above the YELLOW moving average once since it dropped below fast yellow....during the 1/15/09 ....and when it did PRICE stayed below fast yellow keeping the trend in NEUTRAL MODE and thus so far keeping gold below the 1145 area.

Now lets zoom out a little bit more to get a better picture of the current rally from the beginning of the month.

This 60 minute chart of Feb Gold is an hourly close and takes out some of the spikes we'd normally see. There is a very important development going on for the short term. Let's take them one at a time. From the bottom price in late December, we can see how price first got above the FAST yellow moving average, pulled back (right to our support area at the time) and then pushed forward thru the green MEDIUM moving average, and rallied right up to the SLOW red moving average on 1/6/09. during a three day consolidation, into 1/9/09, the yellow average moved above the green average.....and within 24 hours price rallied 40 dollars to our 1160 resistance area we had cited (1160-11183). While last week's high was 1163, notice that the hourly close was EXACTLY 1160.

Now at this point (1160) in time price was above all of out moving averages but had reached our initial mid month objective in price and we reported that our outlook for a mid month rally had met its minimum objective. Our outlook from that time on the updates became one for price to consolidate and enter a potentially choppy and neutral period coming into mid week. This has also played out as the chart below demonstrates. We can see that the last 4 trading days are indeed choppy and neutral.

what next ?

In a neutral range, there is always a little bit of both bull and bear going on in the charts. The biggest development today is that gold has now dropped below the yellow moving average and has failed twice to get back above it. We added some Gann lines to the chart to get a better perspective of support and as you can see the tiny gold 1X3 line has indeed given us a key very short term support area as price has been hugging it over the past two days near the 1130 area as you can see on the blow up below. We see that the green and red moving averages are now flanked just above the key while line support (1110-1115).

The problem going into Wednesday is how to make a forecast of or a trend analysis as to what to expect for the next 24 hours......with the chart below. LOL. I say that jokingly of course. If we are to be successful, we have to take what the market gives us...........and at times it gives us nothing to work with.

So let's take one final look tonight at a zoom out........of our 60 minute chart below.

We're arriving at a very short term decision point.

From a bulll standpoint, the green moving average is getting ready to move above the red moving

average..........and that WOULD be bullish as long price is above that area. Support is 1110-1115 .....but initial support could be the 1X3 area at 1133 ish or the red and green averages at the 1120 area. Thus there is a buildup of support in those key areas in the very short term. On the upside, there is no change.........the 1145-1154 area remains the key area gold needs to get above to re-ignite the short term.

We've discussed over and over the dominant trend during this rally sine the summer as rally early monthly, mid month peak, and sideways corrective action into lower price action at the end of the month (November was the exception) and this has been our outlook for January. When we look at the chart below.........this is exactly what has transpired thus far. A mid month rally, and now a sideways affair that is developing. THAT DOES not mean that it will continue......as the same trend will not forever keep repeating, but thus far the potential for January to do it again is unfolding so far.

IT COMES DOWN TO THIS: We either are about to break out above the 1140-1154 area higher into month's end or gold is about to break the support shelf that has been building since 1/5/09.

BOTTOM LINE: Price remains neutral going into Wednesday but we realize that the odds are about to shift to favoring a lower price into month's end should gold not support near this area. The short term trend will move out of bullish mode below 1110....and turn bearish below 1106. Watch 1126-1131 area.........as any break below that area would prompt a test of 1115-1122. On the flip side, any move above the YELLOW moving average would suggest a test of the 1150-1164 area.

The Euro keeps getting pounded leading the US Dollar some strength..........and this may not be an issue but the Democrats suffered a HUGE loss in USA when Republicans took a Senate seat away in elections yesterday. The importance is that the Democrats no longer have enough votes to just pass anything through they wish. Could be key in healthcare and other programs.

Let's see what gold does here as it attempts to work its way out of neutral mode. We have the supports and resistance.........now we need to see if gold reasserts a trend and gets out of this choppy action.

Odds seem to be skewing to favor the downside.........but we need to see price break to a LOWER LOW on the chart first.

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Gold Daily January 18 2010 10:00 PM EST USA TIME

With markets closed on Monday in the USA, lets take a look at the weekly chart in gold. We come into the week still bullish on the short term even though we are at mid month. Until we break and make lower lows that indicator will stay bullish. There is no doubt that this week is a transitional week for gold. We think that whatever way she goes will set the stage for what we believe is to be the final leg of the winter rally before a deeper correction kicks in later on in the not too distant future.

As we can see the pullback to the end of December had the weekly lows touch our blue fast moving average on three of the weeks.........and price moved up smartly on the 3rd week. One of the things we are concerned about is the fact that our indicators are no longer pegged to the upside as they were during the big run up. The good news was RSI holding the 50 area and turning back up, and the MACD at the bottom of the chart seems to be holding at or near the zero area.....trying to turn back up. Williams also held the key 50 area and has also bounced. SHOULD THESE INDICATORS drop below those levels it would warn of a deeper correction, but for now they have survived the test. The big question is whether the correction that began in December is over or has this just been a bounce? And its a tuff question. There are a lot of analysts who believe it has more room to go on the downside. And while we all have our opinions, the fact is that the short term trend remains up going into this week. There are a lot of cycles due at the end of the week that could be considered as trend changing and worth keeping an eye on near the 21st and 22nd.

What next ?

The outlook into this week is one where we think that gold might rally early in the week and try and retest the 1145-1154 area in gold. This is usually the part of the month where gold gets into a choppy and sideways with a higher price bias. At least that has been our experience over the course of this bull market.

One of the most important aspects to watch for is our fast blue moving average which is now situation at the 1100.60 area. As long as we remain above that average, the medium term uptrend will still be in play. We can see how much higher the blue average is to the medium red moving average which is akin almost to the 200 day moving average, but we use a slightly higher number. That support shows up at the 1000 area. Over the course of the autumn rally, we were using the 2007 rally as a template, and it served us well up into December. We are not as confident that we should still be anticipating the same results from here on. The Oscillators on the chart have moved to much. However there is one important factor and it brings us back to the watching of the blue moving average. We can see in late 2007 how the correction or sideways action of November and December held above the slow blue average. If we look at the pullbacks of 2008 we can see how price broke below the average and even though it would rally in June above it, the average by this time was down sloping and no longer up trending. The same thing happened in September of 2008 when gold tried to take off in its autumn rally. It just could not hold it. But now zoom into the second or third week of January, where price had already exceeded the average and when it came back to test it in early January, the average was NO LONGER DOWN TRENDING or down sloping. It had turned the corner and had inched up in December and was at this point going sideways.

In April of 2009, we saw a break of the slow blue moving average, but look how PRICE RESTED EXACTLY ON THE RED AND GREEN moving averages and supported there. This inspired another rally into June. Finally, the 6 week sideways move in late July and EARLY August (just before the big rally) saw price repeatedly try and break through but each minor penetration was met with buying. As that was occurring to price, notice that the RED medium moving average crossed above the slow GREEN moving average (a bullish signal) right in that time frame. Therefore, as long as gold is above the 1090-1100 area....the medium term trend remains up.

what next ?

Let's take a quick look at the 60 minute chart going into Tuesday evening.

We can see what looks like a potential head and shoulder top and we do want to remain concerned about that pattern. RESISTANCE is the 1140 area where the tiny purple and blue moving averages are flanking the fast yellow average. Thus 1140-1147 is important resistance as is the horizontal gold resistance line at 1151.

Thus the initial range for gold to test and overcome this week would either be at 1140-1143 or it will be the 1X4 purple line and the horizontal gold line at the 1148 - 1154 area. This would seem to be the most important resistance areas this week. Tuesdays action should encounter initial resistance at 1140-1143...and the market should put up some resistance there first. Should price overcome, then we would look to the next level we mentioned above.

Support comes in at the 1126-1131 area and then the 1118-1123 area where the green and red moving averages are. Finally, WEEKLY KEY SUPPORT -------------is the same as we have been using since January began, and that is the 1110-1115 area.

MOST IMPORTANT is for price to ERASE the head and shoulder pattern....and that would require a move above the 1148-1154 area. For Tuesday we look for a test of initial resistance at the moving averages. Like last week, we're waiting to see if gold can get above that 1145 ish area........and its more of the same today. If gold is embarking on a mid month sideways pattern again, then we would view the 1148-1154 area or the 1163-1169 area as the highs this week.

Should gold fail at the 1140-1150 area, we would look at gold pulling back to the 1120-1130. Our best take for Tuesday is that the market will not erase that head and shoulder just yet.........and will probably peak at either 1140-1143 or 1148-1151. It really comes down to what gold will do there.

Odds favor a test of resistance......... we're not sure which one. Let's see what it does when it reaches. Look at the 1X gold tiny uptrend line as pullback support at the 1130 (plus or minus a few dollars)......followed by the red and green moving averages.

Bottom line: The short term trend remains up. Only a move below the 1110-1115 area would change it.

Gold Daily January 17 2010 8:15 PM EST USA TIME

(The weekly button has a full update just published as well.

In Friday's update initial support was listed at 1127-1132 and the low was 1126.60 just 40 cents off our bottom range. Resistance was listed at 1145-1154 and the high was 1145.60 just 60 cents off our bottom resistance target. Our outlook for Friday called for a neutral day and as you can see by the charts and the high/lows above, gold traded almost exactly between our support and resistance listed.

Let's take a look at the 60 minute gold chart since the lows of late December. The lows from 12/23 occurred 48 hours after the North American Winter began officially ending the pullback that we dubbed the "autumn" correction. The correction was from 1227 to 1075. This years pullback ended late as possible from a calendar perspective but also from a seasonal perspective. Our forecast for a mid month rally is complete and as we enter the third week of January price has become very neutral. The more difficult question is what does the next week or two look like? When things become neutral, it is then when the trend is most difficult to weed out what the odds are. We've entered a neutral type of range where the 1115 to 1145 area has pretty much been in effect for well over a week. In an EFFORT to ascertain uptrend momentum, tonight's chart has some W.D. Gann lines added. They are the tiny lines you see extending from the 12/23 low. You can see the top purple one is the 1X4, then the gold one 1X3, the aqua on 1X2, and so on. Each is a level of momentum that the market rally unfolds in. A brief description of them are linked here: http://www.investopedia.com/terms/s/speed_resistance_lines.asp From a short term perspective maintaining the 1X2 or 1X3 line is preferable to the uptrend.

Our most important support line right now is the WHITE HORIZONTAL LINE. Look how each sell off has been to a position just above that line. More important is that this line just wasn't drawn this week. Readers are aware that we have been using this line as a key area for quite a while. This most important line first began to appear on our charts on DECEMBER 7th.....well over 5 weeks ago. We can see that the Gann 1X2 line is approaching the same price area on the chart and that the FAT green moving average has been CROSSING RIGHT at that area all month.........and the SLOW RED moving average is about to arrive at this area very soon. What this means for us is that the 1110-1115 area is BECOMING THE MOST IMPORTANT SHORT TERM SUPPORT AREA on the chart in terms of MAINTAINING THE MOMENTUM as well as the short term uptrend. Another chart pattern that is becoming visible here is the dreaded HEAD AND SHOULDER pattern that if elected would project a move to the 1070 -1080 area (Right where our KEY MEDIUM TERM SUPPORT resides.

What next ?

This upcoming week is a tricky week to say the least. As usual, the bear and bull forces are many. The overlying fundamental condition of the global situation remains in critical condition in so many fronts that the potential of an explosion in price has merit and potential. However, from a seasonal standpoint, this is where rallies usually end.......in the February time frame and where a spring correction takes place. Now it is obvious that defaults and price explosions do not say ............we have to wait until July to do this. However, it doesn't mean you have to be 100% fully long at all times in in expectation of such events. It all comes down to risk and reward. If your fully booked, and price explodes the reward is great. If its a typical season, a pullback into the summer is going to develop at some point........one that is usually not far from this point. So its not about who's right or wrong as much as how well one positions themselves for what ever the outcome is...where they will profit if correct, and minimize the hit if not.

From a cycles perspective I am being informed by my contacts and colleagues that the 21st and 22nd of this month are key cyclical days. What we are unsure of coming into this week is whether we push up from here in gold to peak out or whether we move lower into that time frame and launch into a new rally from that area. We will be looking at that situation as the week progresses.

If we are going to move HIGHER INTO THE NEXT PHASE the potential for the MARKET TO FIRST TAKE GOLD AND DIP IT BELOW THE SUPPORT that is established on the chart is something we need to be on guard for. In other words, and for example, look at the dip on 1/13.......the morning of the jobs report. LOOK how the market dipped below the last two spike lows by just enough to take out any stops that were there. What I am saying is that the potential for the market to dip down to the 1106-1110 area and THEN REVERSE immediately back up is something traders want to watch for. UNLESS THE MARKET MAKES A STAND HERE at the area where the slow red and medium green moving averages converge, it the low 1120 area, the potential for GOLD TO DROP into the end of this week is very possible. With the trend of this bull market usually peaking at mid month and heading lower to month's end the potential for us to break our support area of 1110-1115 continues to gain potential.

Support is the 1110-1115 area on a daily basis.....short term.......and 1070-1090 on a weekly basis......medium term. With Monday closed in the USA, we are going to stay with our neutral bias into Tuesday.

Initial support will be the 1126-1127 area again, with 1115-1119 as important. FAILURE of the 1106-1110 area should prompt a test of the 1070-1090 area in gold.

Odds favor a trade range of 1118-1124 on the downside and 1136-1139 on the upside.

Bottom line: We are neutral..........having reached out initial objectives in price and time on the very short term. The fact that the 10 day, 39 day and 50 day averages are right near 1130 along with price leaves us with no other choice to be neutral. Let's see what price does on Monday. The short term trend indicator at the top of the page remains bullish......however there is no doubt that it remains vulnerable. Watch 1110-1115 area.......it seems to be most important support coming into the week.

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Gold Daily January 15 2010 12:01 AM EST USA

In yesterday's update we speculated that the Thursday odds favored choppy near 1145. We stated the bears had mounted a defense at the 1145-1154 area for resistance and we needed to overcome that area before the rally could resume. initial support for Thursday listed the 1127 - 1134 area.

The high was 1146.50 (within $1.50 of 1145) the low was 1131.50 ( right in the middle of the 1127-1134 support area listed.

As far as our forecast for a choppy day..............below is the tick chart for the 24 hours of Thursday. Price began at the 1145 area (our resistance) drifted lower all the want into the COMEX session....and bottomed a half hour after Europe closed at 1131 (our support) and promptly rallied back up to 1145 area for the close. We ended where we began as far as price goes..........right at that KEY 1145 area that we EMPHASIZED SO MUCH in yesterday's update as to it's importance.

Here's where the short term trend stands

There are a vast array of confluent cycles raging from the short term to long term going on right now. Rather than go thru all of them what it means is that beginning tomorrow and into the 22nd of January could provide impetus for a January peak. We discussed ad nauseam yesterday, but it all comes down to whether gold can now move above the 1145-1154 area on Friday.

From a trend perspective, we already met our initial weekly and monthly objective of 1160-1183. However a move higher above 1145-1154 resistance would prompt another price probe toward our monthly price objective again. Lets look at the bullish aspect in the daily chart below.

The big red arrows show how this rally has tried to terminate twice now as the bears pumped gold down under 1120. On BOTH occasions Gold dropped below 1120 and not only held our 1110-1115 support, but rallied strongly into the close leaving two bullish reversals called a "hammer" or a "tail". This type of price action usually produces a subsequent rally. It is important to keep this rally going at this area as you will see in the next chart.

Key areas to watch

The 60 min chart of February gold below has two arrows where key resistance targets are. The first is the 1145-1154 area (gold horizontal bar) and the second is the aqua short term trend line at the 1183-1190 area. THOSE ARE THE TWO KEY RESISTANCE AREAS TO WATCH.

KEY WEEKLY SUPPORT is the white horizontal line where the gold arrow is in the circa 1110-1115 area. This area has withstood three price probes lower this month. Each has been reversed higher. AS long as gold is above that area, the short term trend remains up.

Initial support is the 1125-1132 area for Friday.

What Next ?

We are really in an area of NEUTRALITY when we discuss the 1115-1150 area. Look at the choppy pattern in there? How important is this area ? IF you look you can see that we have been trying to get above this 1145-1154 area since December 9th.........almost five weeks. The GAP ON MONDAY CLEARED OUT THE STOPS and the subsequent drop back to a SPIKE SUPPORT on Wednesday cleared out all THE NEW LONGS.........So there you go.

THE ODDS ARE REALLY A TOSS UP HERE...................We have a few IMPORTANT CYCLE CONVERGENCES on FRIDAY.......some that could prompt a big move day.............or MARK A TREND TURN short term. THIS WEEKENDS UPDATE will have a chart that shows the best time to buy gold for those who like to only trade the main trend.

For every plus tonight I can throw a minus. Gold should be peaking here.........and a pullback should be in play. One of the things that can happen here is for GOLD TO CONSOLIDATE AGAIN ON FRIDAY just like it did today. The potential to head right back towards 1115 cannot be discounted until we can get above that 1145 area that we've been discussing.

BOTTOM LINE: The NEXT SEVEN DAYS have a major confluence of cycles.........some 30 day cycles, and one 30 year cycle..........how's that for a range?? Potentials for a big move ---- potentials for a peak ????? It's going to be interesting.

THE ODDS ARE NEUTRAL for Friday.....she can go either way and with major cycles in play the next few trading days should be very important as regards to the trend and whether we extend into a high next week or not.

ANY move above the gold horizontal line suggests a move to 1163-1183 next. Until then another probe back towards support can't be ruled out. Those two hammers on the daily chart this week we saw earlier in the update would usually suggest another push up...............and above the horizontal line would have the odds in it's favor to do so.

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Gold Daily January 14 2010 12:30 AM EST USA

Last night's ORANGE SUPPORT AREA ON THE 60 MIN CHART was EXACTLY where the lows of Wednesday bottomed.

In the daily update we laid out our case for the short term saying that if gold couldn't move above the 1130-1135 price area, odds were that we'd be testing our next support area of 1110-1115 on Wednesday. After peaking at 1137 (just 2 dollars above the target area, gold began a decline that lead to a break of the lows yesterday a drop towards support. In that update yesterday, we had this to say about the support area.

" A BREAK OF 1110-1115 would pretty much end the short term uptrend. Until then, the potential for gold to try and crawl back and hold on Wednesday remains a potential. In the last 100 or so days, we've spent only about 10 days below the 50 day. A penetration of it is not as important as to what it does directly afterward and that is another reason why we'll look at the 1110-1115 area on Wednesday. A close below there and we'd join the short term calls for lower prices..............Odds suggest Gold puts up a fight on Wednesday to hold at or near these lows.........and will probably spend five or 10 dollars on either side of 1130.

Our 10:17 am intraday COMEX email update speculated that "the decision as to whether we move higher or lower should be decided in the next 45 minutes."

Fourteen minutes later at precisely 10:31 EST USA time gold reached the 1117.20 area and bottomed for the day just $1.80 shy of our 1115 target and quickly reversed back up to the 1024 area where the first signs of a reversal day began to appear. (OUR HOMEPAGE, published earlier than our daily report had 1118 listed as support making it just 80 cents shy of the low).

Our 2nd intraday email to Goldtrends readers at 12:01 , suggested that "the pattern for the day now had an odds favorite to rally to the close." The red arrow shows the first email update, and the gold arrow shows our 2nd email with the rally to the COMEX close. More importantly, the rally has kept moving up in after hours and on Thursday in the far east.

Finally we discussed that the odds for Wednesday was for gold to trade 10 dollars on either side of the 1129 area. The high for Wednesday was 1138 (9 dollars above) and the low was 1117 (12 dollars below).

Over the past few days we've been discussing the potential that the rally we forecasted at the beginning of the month for a mid-month price high had reached its weekly price target objective at the 1160-1183 area, reaching 1163. And we had great reason to offer a pullback scenario as price had bounced off of the aqua short term trend resistance line. Indeed the market peaked on Monday and began a 46 dollar correction over the past 56 hours and our KEY RESISTANCE area held this again.

For those who also read the silver page (and serious short term trend watchers should) we discussed earlier this week that a short term pullback of 48-72 hours could very well be in play. This mornings market low was somewhere near the 56 hour area.

What does it all mean ??? LOL. It means that the potential for gold to now rally into it's IDEAL end of week very short term target is STILL in play. We've gotten our pullback to KEY SUPPORT this morning, ........PRICE HAS HELD and the short term indicator at the top of the page.........remains bullish. The market right NOW has moved back up and IS SITTING RIGHT AT THE PIVOT POINT OF THIS SHORT TERM MOVE. LETS TAKE A LOOK at the chart below.

First off, today's drop to the 1117 has sighs of a "FLUSH OUT." A flush out is when the short term stops are hit by the market. If we were to remove the flush out from today's 60 min chart what would it look like ???

It would look like THIS chart below:

This version of the 60 min chart is hourly closes. Let's relook at market action. It's a totally different view. We can see that the lows of the past two days are (SO FAR) nothing more than a RETEST of the slow red moving average. I always allow for some penetration of the averages and that's all that price did today. From an hourly perspective, we did NOT CLOSE LOWER THAN YESTERDAY OR TUESDAY and look how price retraced back above ALL THE MOVING AVERAGES. In two days we've gone thru all but the MEDIUM GREEN MOVING AVERAGE which is now PERCHED on our KEY WHITE HORIZONTAL LINE A THE 1110-1115 area.

What next ?

Let's discuss the bull and the bear over the next few days. First the bull trend situation.

THE UPPER GOLD HORIZONTAL BAR on the chart overhead represents a price area just above of what I call the "three sisters" peaks. The middle peak is the one that the red moving average is going through around the 12/11 date.......and the other two peaks flank the left and right. THOSE THREE peaks are at the 1143 area. That puts price at resistance RIGHT NEAR THIS AREA. We can use the 1145 to 1154 area as initial resistance which, if overcome..........would favor a run to the 1163-1183 area into weeks end. We can see that the run to 1163 exceeded those peaks, but as we mentioned on Monday's update, we had come too far to fast....and gold was shortly rejected there. THE GOLD HORIZONTAL BAR IS WHAT PRICE MUST STRADDLE on Thursday if we heading for another test of the AQUA CHANNEL LINE.

ODDS ARE GREATLY INCREASING THAT JUST SUCH A POTENTIAL COULD BE BREWING FOR THE END OF THE WEEK. We've also discussed the yellow moving average CROSSING above the red moving average on the chart to the upside a few days ago....which adds fuel to the short term bull case also as the MOMENTUM IS BEGINNING to increase at a faster rate.

But it all comes down to price if we really think about it. Most of us have our opinions and technical indicators, and cycles, and channels, on the charts. Others use planetary time cycles that produce highs and lows often enough to know there's something there as well that exists in cyclical activity. But in the end it all comes down to price. Today is a great example of letting price determine the outcome. We stayed firm on our supports and the short term trend on top of the page remains in bull mode.

Any move below 1106 and the short term will flip out of bull mode.

Tomorrow comes down to whether price can now move above the gold horizontal bar at 1145-1154 area. A move above that area and gold would most likely challenge the 1164-1183 area.

One of the things stressed last night was that if GOLD WAS STILL bullish that price had to make a fast move back up. Twenty four hours later, gold has done JUST THAT.

What about the bear ???

Well, if you'll recall on Monday, not only did we advocate a potential price peak, I shared my observations with you that so far during this rally since late summer, price usually begins to start a choppy sideways type of action during this time of the month. If you relook at the chart we've been up fast, down fast, and up fast in the past few days.........exactly following the script thus far in that category also. When gold was really strong during the momentum runs it would chop like this but would keep making new highs bit by bit and pullbacks would be lower lows. BUT GOLD on an hourly basis HAS NOT MADE ONE IMPORTANT LOWER LOW SINCE THE RALLY BEGAN 14 DAYS AGO.

Just to be sure we cover all basis here tonight.........let's look at the zoom out.

Here we see the MEDIUM TERM THAT IS UNFOLDING. Ever since the rally began in September we see middle of the month peaks and pullbacks to month end.........that is until November. November had a cycle inversion. Instead of the low coming at the end of the month.....another HIGH took its place. THE CYCLE is still there, as the exact peak was a high.....and a pullback and new rally developed here in January. Now while gold survived today's support.........on a medium term basis, we are not out of the woods. Notice how price is just hugging the 50 day average..........but each test has been met by a HAMMER bar on the chart..........another bullish factor. As far as the technical indicators.........the are in OK condition. SUPPORT IS ALSO GROWING.

KEY SUPPORT is the 1110-1115 area. This view below shows it to be right at the daily channel line for this rally as well. But other initial support for Thursday shows the 1127 - 1134 is forming. If gold is indeed fully recharged ready to move up............we should hold near that initial area.

As you can see.........I KEEP LOOKING FOR BEARISH angles tonight and they are hard to find.

Finally ---------Whew. The entire scenario ABOVE is ONLY going to happen if we can overcome the PRICE RESISTANCE THAT GOLD IS AT. 1145-1154 is where the bears have mounted defense while the bulls are supporting 1110-1115.

BOTTOM LINE;

As long as we hold 1110-1115 the short term trend remains up and the potential for the rally to extend is still alive. Barring a pullback to support, Thursday odds favor choppy near 1145. IF WE CAN MOVE ABOVE THAT 1145 area to a test of the Gold Horizontal bar at 1153ish ODDS ALSO FAVOR THE UPSIDE COULD EXTEND and LAST INTO NEXT week. But lets not get to far ahead. Let's see what Thursday brings.

Gold Daily January 13 2010 12:45 AM EST USA

I'll be brief tonight. Although we expected a consolidation day Tuesday, (we got 22 hours of it) we stated this on the daily update:

Particular attention should be paid to the December 8th high at the 1168 area. FROM 1163 to 1183 seems likely to produce a high for this week. Also add to the fact that we are approaching the middle of the month (an area we deemed likely for a short term bounce.....although it's clear by the price that we have gotten a rally and not a bounce. Therefore, I am reluctant tonight to call prices any higher than the aqua channel line for the week.

The high so far is 1163 and odds have greatly increased that the highs for the week are in. Let's discuss what I don't like. We penetrated 4 MOVING AVERAGES in just a few bars. That is USUALLY THE SIGN OF A SELL OFF and is how the December drop began. EXTREME caution if your heavily long would be my suggestion for the short term. A couple of readers who are not usually moved by much wrote to me telling me they we're buying puts in silver. So there is definitely some extreme caution moving in. A lot of the newsletter guys are also turning bearish on the short term. LETS ZOOM IN ON THE CHART. We can see that today's breakdown at the gap has price now TRYING TO CLIMB BACK ABOVE OUR KEY SLOW RED MOVING AVERAGE. And right above it is our fast Yellow....which is in a golden cross.......right as price is there also. This is a key area that MUST BE OVERCOME AND FAST. A failure to do so will OPEN the door for another LEG DOWN and fast. Key short term support is the orange "oval" at the 1106-1120 area. Beyond that and the 1070-1095 area would open up again.

So it comes down to....either we move up above the 1130-1135 zone or the pullback and fast or we head towards the 1106-1115 area next.

What next ?

There is certainly a lot of weight on gold right here with the mid month cycle due we've been discussing, and the hit of that Aqua trend line resistance on Tuesday. There are a lot of savvy Elliot Wave guys who read the rally we had as a "B" wave.....meaning there is another leg down to go. There is yet another aspect to consider. The drop from 12/3 to 12/23 was 20 days. The rise from 12/23 to 1/12 is 20 days.........or a SQUARING of time and capable of producing a turn. BUT THE WORSE from my work is the PENETRATION of tiny blue and Purple, fast yellow and slow red moving averages. LOOK how price is trying DESPERATELY TO CLIMB back above that SLOW RED moving average where I have drawn the GOLD ARROW. This is almost a must here. A failure here will add additional pressure.

SO is THE SHORT TERM TREND NOW BEARISH ?????

It depends on how you measure it. If we measure it in PRICE it has NOT MADE A LOWER LOW yet. From a price perspective...........it has not signaled a SELL if you will. However, when we look at the pattern, it is in danger of doing so.

PERSPECTIVE IS ALWAYS EVERYTHING....... we can also say that the PULLBACK WE SAW IS ONLY A Fibonacci 38% retracement (a typical pullback in trends). Can it extend lower ? Sure. But my point is this. ALTHOUGH there are a lot of indicators pointing down..............PRICE HAS YET TO CONFIRM that is the case just yet because it has not broken THE KEY LOWS YET. But make no doubt...........a lot of technical damage was put on today.

When we look back in Sept, Oct, Nov ---- what we see are choppy mid months but NOT SELL OFFS. The difference of course is December. Interestingly, the lows of Dec 10th thru the 16th were all pullbacks to around the 1115 area........and it was a choppy time.

Therefore the potential for gold to hold at the 1110-1115 area is still a possibility from a price perspective.....but it does look precarious tonight due to the extent of the move down.

It comes down to then what we said earlier.............failure to move back above 1130-1135 leaves this market in short term trouble. That is the key thing to walk away with today as it relates to the short term. In fact, the SLOW RED moving average yellow moving average, along with price .....are all sitting at the 50 day average as well. SO its a key area.........but 1110-1115 is the biggie short term..........and to some extent 1095 on the medium term.

We've discussed all along over the last two weeks that while we have anticipated this bounce from right at the day it began on the 31st...........to the top at 1160 for the short term, we've discussed that the medium term was still in question as to whether we've seen the lows. We've been using the 1070-1090 area for that timeframe. And that is why it is important to know the positions you hold...............are they short term or longer term positions.

I don't do much fundamental work, I leave that to my cohort Greg, but I can't help but notice the mini shake up in the markets since China announced some tightening of monetary policy over the past 24 hrs.

Lets look at one more chart.

The daily gold chart shows all this was today was a pullback to retest the 50 day moving average. Notice it is the third time we touch it in five trading days. That is yet another reason why this time we think it needs to hold. The green moving average, which caught the lows right on tee is our own short term average. That area is now the 1093 area. CRITICAL TO THE SHORT and MEDIUM TURN. A close below there PUTS THE MEDIUM TERM TREND OUT OF BULLISH MODE. NOTICE that this rally all started when the BLUE AND GREEN MOVING averages were together in late august. So this area is also important.

Finally the 200 day average............which is still way down there at 999. At some point in time this year, we are going to touch the 200 day average. ODDS FAVOR IT. IT HAPPENS JUST ABOUT EVERY YEAR. What else? Weill RSI is right at the 50 area and Williams is just above it.

BOTTOM LINE: LOOK FOR GOLD TO TRY AND HOLD THE LOWS OF Tuesday and FRIDAY. For tonight, PRICE has not told us it is BEARISH YET. But it certainly could do so from here.

I could go on and on and get into the monthly chart as it also has interesting things to discuss, but I need to end it for tonight.

A BREAK OF 1110-1115 would pretty much end the short term uptrend. Until then, the potential for gold to try and crawl back and hold on Wednesday remains a potential. In the last 100 or so days, we've spent only about 10 days below the 50 day. A penetration of it is not as important as to what it does directly afterward and that is another reason why we'll look at the 1110-1115 area on Wednesday. A close below there and we'd join the short term calls for lower prices.

I've put stops on all my purchases in the past few weeks at or near breakeven. I continue to hold medium term core positions but certainly not as much as in October/November.

Those who are cash heavy might want to wait a bit here to see how it shakes out. Better to miss a little upside than to buy at a TIME when price has the potential to drop.

The final equations tonight are GOLD STOCKS..............and they also have dropped. Check out our gold stocks section for support areas in GLD and GDX.

Odds suggest Gold puts up a fight on Wednesday to hold at or near these lows.........and will probably spend five or 10 dollars on either side of 1130.

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Daily Gold January 11 2010 6:15 PM EST USA

Coming into Monday our forecast was that if we exceeded the 1148 area that a move towards the 1160-1183 would be on tap for this week. Friday's update (see report below) had a KEY CIRCLED area between 1110-1120 which was our key support area. We mentioned that the upcoming jobs report over the last few announcement had gold move lower into the report............but then sprout higher. This is exactly what transpired on Friday as the low was registered at the 1119 area just before the Job report. Form there prices vaulted about 20 dollars higher and closed the week above our SLOW red moving average.

Last nights update suggested that a move above the 1148 area would prompt a test of the 1160-1183 area this week. (see update below)

The gold market opened in the far east with a gap up in price that was maintained for the entire day. Prices opened at the 1151 area and that remained the low for the day until very late in the COMEX after hour session as we saw lows at the 1148.20 area. This was within 20 cents of our 1148 key price area. Within one hour after the open the majority of the move was already in place as the market chopped around for the remainder of the day, especially the COMEX in New York.

One of the things that has us bullish is the COT short positions are not coming down, and the performance of Silver which was very strong last week and the dollar pullback from its key resistance areas.

Lets take a look at the 60 minute chart of February Gold:

We can see below the exact test of the aqua trend line we listed on our home page from Friday night as well as last night here on our daily report.

We've been reporting since the low of 12/31 that the short term pattern looked bullish as the moves develop in 5 wave patterns. After holding the SLOW red moving average all the way to Friday morning, gold blasted past it from the beginning on Monday. The question we face tonight is two-fold. First, will we fill the gap, and second, have we already seen the highs for the next couple of days?

Let's review the clues we used to hone in on this rally. First we noted that the first move up had a nice pattern to it. Then we noted that the pullback had held our key area of 1085-1090. We then noticed the action that the tiny blue and purple moving average had finally moved above the yellow moving average. Our key area we were watching was the white horizontal line near 1115 as the key area to move above. On 1/3 price confirmed by moving smartly above the white horizontal line, and the pullbacks were supporting the 1116 area. In fact the low of the pullback was exactly at the 1115-1116 area. We had our short term indicator set to turn bullish above 1125-1130. On 1/6 we got a move to the slow red moving average and we anticipated a pullback to the job's report and suggested that the last few reports were met with higher prices after the announcement. We suggested on Thursday night that prices would be choppy and this is exactly what developed on Friday. We suggested that moving above the red moving average would get this baby in gear. That LONG RANGE bar back to 1140 was a key clue on Friday's chart. Notice how the final pullback after that big bar pulled back to the tiny moving average and then closed Friday on its highs. The rest was history this morning as price gapped up strongly.

What next ?

I want to make you aware of a very INTERESTING TIME FRAME that is about to take place. IT WILL BE exactly 30 years ago on 1/21/80 that gold made its all time HIGHS of 875. The 30 year TIMEFRAME is a very important GANN (W.D. Gann is one of the legendary traders of the 20th century). I must admit I am not a huge follower of Gann as his work is very esoteric in my view. However, his famous quote of "if you want to know what the market is going to do in the future, look at the past" is something I follow with fever. I am not going to go out on a limb and tell you the market is going to exactly peak on the 21st of this month and put in a 30 year top. However, I am going to be watching the market very carefully over the next few weeks. IT IS SOMETHING we need to have on our RADAR ---- not as it pertains to the short term, but to the long term. If there are any Gann experts, please mail me your views on the subject.

Back to tonight. Particular attention should be paid to the December 8th high at the 1168 area. FROM 1163 to 1183 seems likely to produce a high for this week. Also add to the fact that we are approaching the middle of the month (an area we deemed likely for a short term bounce.....although it's clear by the price that we have gotten a rally and not a bounce. Therefore, I am reluctant tonight to call prices any higher than the aqua channel line for the week. The line itself is showing the 1163-1168 area for Tuesday's action. With a 90 dollar rally in 10 days however, it is both tough not to be bullish, but also tough not to expect a pullback. With that said, it does seem that the market might have one more push higher, but we are not certain.

Support for Tuesday is the 1130-1138 area, and the minor support at the 1143-1145 area.

Odds favor a consolidation day Tuesday.

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Daily Gold January 10 2010 6:15 PM EST USA

See our weekly button for details.....here is our forecast from Friday evening after the gold close. (Also listed on the home page)

We will update Monday Evening.

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Daily Gold January 7 2010 9:00 PM EST USA

In last nights update we discussed how we were at a key resistance area and that gold had met our price objective of the 1140-1150 for the bounce/rally. We discussed how we were at the SLOW red moving average, our most important short term moving average. Thus our outlook was for a consolidation day on Thursday and that is what we got. We have Support at the 1125-1129 area. Thus far we've pulled back to 1126, which is where we are right now. You can see how price was in a tight RANGE right where our red moving average was, and the RED CHANNEL line we drew on the chart BEFORE price got there. LOOK how price spent the last 24 hours right in between that exact line and red moving average. Now, in early Friday trading we have broken down and we are supporting on the TINY PURPLE moving average.

WHAT NEXT ?

Last night we discussed how we were concerned that we had reached our price objective early and that the potential to begin a sideways/choppy price pattern --- one that could last to next week and even into a pullback. We suspect that we're seeing the beginning of this phase. THE GOLD ARROWS SHOWS HOW IMPORTANT THE RED MOVING AVERAGE IS and the failure of the next set of supports will put the short term bounce in trouble.

We've drawn the WHITE CIRCLED area where KEY SUPPORT for FRIDAY and next week is. Any break of 1122 will set up for a test of this area where the white horizontal pivot line, the green and yellow moving average have all converged in the 1106-1115 area. So, from a support basis.........initial is 1115 -1122 and DAILY is 1106-1110. Weekly support is the UPPER AQUA channel line at 1095. ANY CLOSE BELOW THERE and the SHORT TERM TREND will be back to NEUTRAL/Bearish.

In summary, we've reached that KEY area we've discussed and we've entered a consolidation phase which was forecasted for Thursday.

RESISTANCE FOR FRIDAY IS THE 1033-1037 area and the 1044-1053 area.

The OTHER ISSUE we prepared you for last night was the JOB REPORT ON FRIDAY. GOLD HAS NOT DONE WELL ON JOB DAY...........in fact it usually sells off. But you know what ? The last few times it did not affect gold. And the sell offs turned into REVERSALS HIGHER.

AS WE CAN SEE by the chart.........and we also mentioned this last night.........THE RED MOVING AVERAGE is the baby we need to GET ABOVE for this rally to get legs.

BOTTOM LINE: IT ALL COMES DOWN TO THE JOB REPORT..........good or bad the gold market is going to probably be choppy. We have our support.........and resistance.

ODDS FAVOR (as we said yesterday) that consolidation and a test of support is the mode for Friday and it could be a wide range. Silver also failed to get back in its channel line .........and the potential for silver to have peaked into next week is also a factor. Any close below 1095 puts the short term out of bull mode.

A KEY MARTIN ARMSTRONG DATE IS NOW IN EFFECT IN THE 8.6 YEAR CYCLE. One key market is going to have a major turn in the coming weeks.

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Daily Gold January 7 2010

Last night we discussed the silver clue that it was leading........and boy that kept on going today. Reader Dave who watches Platinum and Palladium had clues from Tuesday in an email he sent me that the upside was still the odds favorite also. Our outlook was for the pullback to end and then another attempt at a bounce rally. We gave some deep support areas but said this:

BOTTOM LINE: "(We don't think the rally attempt is DONE............just a question of finishing this pullback we went through today.

The high at the COMEX was 1138 ish..........very close to the lower end target.........and RIGHT ON THE SLOW RED TREND LINE. As far as the low, we got down to the 1118 area, just a few dollars above the support range. When we think about it, this was pretty much the same action we saw last week.........rally, pullback, and rally again.

Last night we were still favoring a rally to mid month. Tonight we not as sure because we've reached the PRICE AREA we were looking for..............just a LOT EARLIER than we expected. Interestingly we did discuss a minor cycle high potential that could begin late in the week. Now that we've reached this higher price range, we have to at least address the potential for gold to begin a sideways / choppy fashion price pattern.............one that could last the rest of the week and into next week.

The 60 min chart at the bottom shows the two bounces off the small red channel line, and the two pullbacks we got going into Wednesday. This latest action shows how we got to the WEEKLY 1140 resistance area we projected at the beginning of the week. That range was 1140-1150 Directly above we see 1150 and 1180 as the other two key areas. We think that the potential to chop around here is good. So far, we've pulled back to the small red channel line and the SLOW red moving average is arriving right there too. The other key moving average have ALL CONVERGED AT THE 1115 area where the white horizontal PIVOT POINT LINE FOR THE WEEK is. Recall we said it would be the Pivot POINT on the weekend update ? Look how price first bounced under it.....and twice this week pulled back to it from the bounces off the small red channel line. THIS AREA looks to be good support here now.

What next ?

Here's the issue tonight. The market (at least how I see it) is time and price. We were expecting a mid month high and a pullback. BUT IN PRICE we've already reached the objective. From the PERSPECTIVE, the possibility to NOW TRADE SIDEWAYS & Choppy TO MID MONTH IN A PULLBACK IS ALSO WIDE OPEN AS A POSSIBILITY.

The market dynamics are increasing in many avenues. Lets discuss the COT issue again. Last week I reported that a move down from the peak price DID NOTHING TO REDUCE THE OPEN INTEREST (I may have reported that on the silver thread only but it applies to gold). And that can only mean ONE THING..........and for the shorts it could be big trouble.

If open interest did not decline it can only mean that NEW BUYERS CAME INTO THE MARKET. FOR EVERY SALE, the short positions in the market we're only able to reduce their position marginally. There position is so big that the percentage decline in their position was negligible.

ARE WE SEEING THE BEGINNING OF A SHORT SQUEEZE ???????????????? The big one?????????????

There is more rumor of delivery contracts paid off in money for December.....and the Feb delivery rumors are already beginning. CLEARLY THE MARKET HAS MORE CONTRACTS SOLD THAN IT CAN DELIVER......and thus the potential for a panic buying binge cannot and should not be discounted in this market.

You see the action here could suggest that the shorts ran for cover at the same time FRESH NEW YEAR BUYING was COMING IN and this is RUNNING THE PRICE UP.

Now...........before we get hog wild in parabolic land.........the odds do favor that gold should start seeing resistance from this price area or near it..........for the remainder of the week.....the 1145-1150 area should be a tuff nut to crack.

The COT situation needs to be watched. I wonder what Ted Butler's latest thoughts are?

What about THE JOB REPORT THAT IS ABOUT TO COME OUT FRIDAY ???? IS IT going to be a bust or are the BOYZ GOING TO STUFF SO MUCH BOLOGNA in it that the STOCK market takes off and heads for 1150 S&P or higher clearing out all the stops as the NEWS IS GREAT ??? Since new jobs is the biggest lagging indicator the odds would favor a bad number. But who knows what to believe when the stats come out? COULD IT BE POSSIBLE THAT IT WILL BE GANGBUSTERS..............and the DOW goes up 300 ??? If not, the dow should shed 300 then because price has come to a COMPLETE GRINDING STANDSTILL WITH A VERY TIGHT RANGE. SOMETHING IS ABOUT TO GIVE and it won't surprise me if its FRIDAY. The metals DON'T HAVE A GOOD TRACK RECORD on JOB DAY............its like only 3 of the last 30 have been good for metals..........but of course two of them is in the last few months.

To further complicate matters is the fact that in the New Year fresh money is being deployed and the ones who were left off the gold and silver run of last year need to get some in the portfolio. With Silver on sale from the December peak, the combination of new buyers, sellers from last months peak, short covering market players jumped in from the get on Monday...............and the rush into today triggered all the HEDGE FUNDS TO ENTER THE MARKET........and everyone wanted in THIS WEEK.

WHAT NEXT ?

THE POTENTIAL FOR A PEAK UNTIL MID-MONTH and sideways action would most likely occur here at this price zone. IF it DOESN'T the potential to move right up towards 1150-1180 could develop should we continue higher into mid month.

SUPPORT initially is now the 1125-1129 area followed by 1110-1115 and 1095-1100.

BOTTOM LINE: We are at a key resistance area.........and a sideways/choppy action with a pullback here should develop for the remainder of the week. While we we're looking for a mid month high, the short term price objective has been met. This leaves us neutral at this price area for Thursday.

As far as the trend... while it may begin to chop sideways here.....the short term trend is up and we are still looking for higher price into mid month. Should we begin to chop we think that price will support on our key areas on the chart.

Having held the 1070 area.........the medium term trend remains up. Having exceeded 1125 the short term trend flipped bullish today.

Odds are Thursday should consolidate.........BUT BARRING PULLBACKS.........the trend is bullish and the bounce UNLESS IT ENDS RIGHT NEAR THIS AREA is favoring a rally into mid month.

WHAT ABOUT TRADING ..........OR BUYING .............OR WHAT SHOULD I DO ?????

First off, I get a lot of emails, should I buy now ? What do you think?

It comes down to what type of investor you are. Short, medium or long term. It is a question you should try and define on each and every purchase. If your an investor, your not selling here. Not until at least a KEY resistance area like 1070 is broken. Even then, if your not a trader...............then you might be holding. The next question is SHOULD YOU ADD? That is easy to answer. ARE YOU WILLING TO RUN A STOP BELOW 1070 or 1090??? IF not, then where ? Define your risk. HOW MUCH are you willing to lose??? Every trader thinks of how much HE/SHE can make. No. How much are you willing to lose on this trade? Get that first..........then plan the entry and stop.

Lets say its $5000 dollars. Then 100 ounces of gold with a stop below 1090 is your answer. Lets say your willing to risk $2500 dollars on a trade, but you'd still like to have 100 ounces. Fine, look to buy gold on a pullback to the 1115 area where the moving averages are and put a buy there....then run your stop. Couldn't the stop be higher? YES. But the chance of being stopped out grows exponentially the closer you are to market price.

How about buying pullbacks???? Yes............buying a pullback here would be good. Adding at KEY SUPPORT AREAS can be good also. Would have been perfect at 1115 if your a trader. But if YOUR AN INVESTOR, your more TIME oriented and your stops would never be that tight.

You see, the reason it is so difficult to tell an individual to buy here, sell here.............is that we ALL HAVE DIFFERENT HORIZONS and circumstances that must be considered. The above is just about picking a stop and it took that long and measuring the risk.

The point tonight: Know how much your willing to risk, know where your stop is..............and divide that by the current price..............that tells you how many shares, or ounces you buy.

Always have an EXIT.........I'M WRONG price. NEVER EVER LET A SMALL LOSS TURN INTO A BIG ONE. You can get away with a lot in markets..........BUT NOT BIG LOSSES. They end the game for you. Step aside and wait for a better opportunity when a trade goes against you.............when the loss is manageable.

You are not in control of PRICE. THE MARKET IS. HOWEVER you are in control of RISK. Know what your willing to risk. Don't wait for a 10% move to enter a short term TRADE. However, a medium term person would be different. They could buy a bit here..........and if it pulls back, but a little more accumulating on dips, building a good position near support areas..............and CULLING some near the channel top trend lines.

In the coming weeks we'll use some chart EXAMPLES real time to show the setting of stops.

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Daily Gold January 5 2010 7:00 PM EST USA TIME

In last nights update we added a new short term RED TREND LINE (see Gold arrow) to provide resistance for Tuesdays action. As you can see below, both peaks in price bounced off that new short term line. Here's what we wrote in Monday's update regarding Tuesday prices: " Tuesday most likely will be a consolidation day bouncing around the white line, the green average and the red line at the 1130 area." We didn't quite hit the green average and the while line, missing by a few dollars, but Tuesday's forecast of a consolidation day was right on the money. We also gave initial support of 1108-1115 ----- the low was 1115.50 for the day.

What next ?

Resistance remains the 1125-1130 area and the SLOW red moving average at 1138-1140. Silver has already reached the SLOW red moving average. In fact...........FOR THE FIRST TIME IN A FEW MONTHS.........SILVER IS LEADING.

SILVER ALWAYS LEADS THE LAST RALLY BEFORE A CORRECTION.............and the METALS have NOW ENTERED THE WINTER STAGE....... WHERE MANY OF THE HIGH PRICES FOR THE YEAR IS MADE and TOPS that last a few months. In other words, its usually the last rally leg until the fall.

IS SILVER GIVING US THE CLUE THAT WE ARE IN THE WINTER RALLY AND THE CORRECTION IS OVER OR THAT JANUARY PRICE IS HEADING FOR THE HIGH LEVELS OF DECEMBER ??????

THIS IS SOMETHING WE NEED TO KEEP ON RADAR.............AND IT MIGHT BE PROVIDING A CLUE. SILVER'S UNDERPERFORMANCE IN NOVEMBER WAS A BIG CLUE THAT HELPED GOLDTRENDS CALL FOR CORRECTION RIGHT AT THE PEAK. IS SILVER NOW TELLING US ..........."ALL CLEAR.............WE ARE READY TO ROCK?"

We're not sure yet because we've only traded two days since the cycle low. But its on my radar.

The March Silver chart shows where we've reached the SLOW RED MOVING AVERAGE. Silver has already moved above the December last two short term peaks while gold has not moved above the Dec 15th peak at the 1140 area.

The two black arrows show the next resistance for silver if it breaks above the RED moving average. (look how the NOVEMBER lows were all off that red average).

The fact that we are dealing with two timeframes (short and medium term degree) in gold and silver had us anticipating this bounce in the short term, but what we are not certain of is if the medium term is complete.

What we think is most likely is that JANUARY is going to provide a type of trading range where we could very well rally towards the 1180 -1200 area again.......moving towards the highs of the year, and coming close or slightly above the DECEMBER highs in late January to Mid February.

We feel that a mid-January peak leads to an early Feb low..........and then the final leg of this current run would take place. Odds favor the peak would be in the 1180-1250 area. None of this is cast in stone, but something to keep in mind.

The question for Wednesday is where this pullback supports ? Odds favor either the 1106-1113 or 1095-1100. We favor the first.

There is the slight possibility that we've had a 3 wave affair up and that a minor cycle peak due between now and Friday takes hold and brings gold lower into mid month. However, until we see different, we are going to stick with the mid-month outlook.

CHECK THE GOLD STOCKS BUTTON --- there's a chart there of the gold etf (GLD) that has a great shot of the MAIN channel and the momentum channel. GOLD IS BARELY HOLDING THE MOMENTUM CHANNEL. We suggest you look at it as it gives a great view of what could develop if this bounce/rally were to FAIL. That signal would be a drop back out of the momentum CHANNEL and a close below last weeks low. If that were to develop, we'd see another leg down. We will be keeping that chart updated during this critical time.

KEY IS IF IT HOLDS............WE MOVE up from here towards the 1140-1153 area into mid month.

BOTTOM LINE: (We don't think the rally attempt is DONE............just a question of finishing this pullback we went through today.

Ideally, we bottom on this pullback in the 1106-1116 area for the Wednesday low. Once this pullback is complete (and it could be already) gold should make another attempt at the small red resistance line. ANY FAILURE AT THE 1122-1124 area on the way up where the tiny blue moving average is at and a drop below today's low would warn of a test of the lower support areas on the chart (white line, yellow average, upper aqua line) at or near the 1100 area.

In simple terms.........the pullback could be deeper and hit between 1097-1106. If the current pattern pullback keeps up, we think the OUTCOME is still short term bullish.........and favor the 1106-1116 area as a low.......but keeping in mind that one more shot at 1097-1100 is still possible.

Odds favor pullback support near the green moving average and the white line and another shot higher.............over the next day or so. Watch 1122-1123 and the 1130 area where that small red line is.

AS far as the short term.....remember we came OUT OF BEARISH MODE on Sunday evening for the first time in a month...........and we're on the edge of a bullish run. Remember to check out the GLD chart on the GOLD STOCKS button to get a zoom OUT view.

May you all prosper

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Daily Gold January 4 2010 10:15 PM EST USA TIME

Coming into Sunday nights update the outlook was to pierce above the aqua channel line and test the 1110-1115 area on a bounce. We listed first key resistance for the week at the 1125 area. Thus far the high has been 1124 as gold produced a 25 dollar rally out of the box on the first trading day of the new decade. The low was 1093.50 and it was made early in the session as a straight up day in gold was the modus operandi. Our short term TREND indicator at the top of the page flipped Neutral just after the open on Monday mornings Far East session. We can see that once we supported on the tiny blue, tiny purple, and the fast yellow moving average --- at a time when both the tiny averages were above the fast yellow average for the first time in one month........a rally developed to the upside. We noted this time frame as one that had the best chance of staging a bounce since the correction began and that ended up playing out so far.

We have been suspicious of a rally beginning ever since we rallied last Wednesday in an impulsive fashion. We looked for a pullback mid-week and we projected the 1085-1090 area on Tuesday as a potential pullback low and that also ended up being the support low as we hit 1086. Last nights update favoring the upside was only to the 1115 area, but the fact that we rallied all the way to weekly resistance in one session is suggestive that many are ready to jump on board in a moments notice......or that the BULLS ARE BACK IN FULL FORCE. The fact that the SHORT INTEREST did not decline during this pullback is most worrisome for the shorts in this market. While a 25 dollar pop was nice to see it does promote a bit of concern that this might be just a 3 wave bounce of which the 3rd wave bounce would already be near completion. We won't worry about that unless price starts breaking below 1095-1100.

What next ?

I've drawn a small RED LINE form the mid December lows and the 12/21 highs. That line extents around the 1125-1130 area. Now we've already gotten a pullback from 1125 during the COMEX session when we pulled back to the 1117 area. You can se it on the chart below.....as we got to 1124, we pulled back to where the GREEN moving average and the WHITE horizontal pivot line on the 60 min chart exist. Look how the tiny moving averages, and the yellow and green moving average were all within about 15 dollars of each other today on the chart. Whenever averages tighten up like this the potential for trend turns increase. I've also put in a yellow block area the NEXT MONTHLY RESISTANCE AREA for gold.........the 1155-1180 area. Below that we have the 1140 area (red moving average) and the small red line drawn that points to the 1125-1130 area. on Tuesday as 1125-1130 and then the 1140-1150 area.

Support is the 1108-1115 area for Tuesday followed by 1095-1100.

Odds favor the continuation of the uptrend --- but we suspect we will encounter a bit of resistance either at the red line or the red moving average on Tuesday.........1125 - 1130 or 1140-1148 ( the highs of 12/16 and the red moving average)

Bottom line: The short term trend is neutral and near turning bullish. Tuesday most likely will be a consolidation day bouncing around the white line, the green average and the red line at the 1130 area. Barring a consolidation, the odds favor the metals staging a rally into next week.

AS LONG AS WE REMAIN ABOVE THE 1070 AREA --- THE MARKET SHOULD DRIFT HIGHER. WE'RE STILL "iffy" THAT THE FINAL BOTTOM IS IN on a medium term...........but the fact that all the analysts are saying that just might provide the impetus for it to be so.

Lets see what GOLD NOW DOES WITH this first resistance test at 1125 -- 1130 on Tuesday.

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Daily Gold January 3 2010 10:00 PM EST USA TIME

The short term trend above is being moved to NEUTRAL at 1098. Price is unchanged since 12/18/09. ANY MOVE BELOW 1070 would flip the indicator back to bearish. The last change was December 4th when it went bearish at the 1188 area.

We enter the new decade with the very short term price in neutral territory, above the key 1070 area and below the 1110-1115 area. Last week was our transition week outlook and that did play out for us as gold basically bought time trading within the confines of the price range of the previous week. Now as we enter the New Year its like the first few minutes of a new basketball or football game where each side (Bears vs. the Bulls) (Only in Chicago where the CME is would they call football and basketball teams the Bears and the Bulls)...........as I was saying, the beginning of the year can be like the beginning of a new game. Each team can either check each other out slowly or one team can come charging at another.

Coming into Monday's trading the market is still looking for those big upside days we had last fall to come kicking back in. The long range days to the upside have certainly not been around in December. The "regulars" will all be arriving back at work and we suspect that by Wednesday the new year will be well under way and the markets will be at full strength once again.

Whether we like it or not, a change of years and decade and the psychology it brings to the human emotion and markets is something we cannot get away from. Any way you look at it we are in 2010 mode now and there are many minefields that will need be navigated. The crisis situation has not been fixed and there's only a band-aid on the wound. Yet when presented with all the same so called stats, the paradox of the market is evident.

The division as to the outlook for 2010 ranges from TOTAL COLLAPSE to a MAJOR BULL MARKET resurgence. Some say gold to 2000..........others say below 700. Some say silver to 100 while zinc mining operations (who sell silver as a byproduct) say that silver is very overpriced. Some say the DOW is going to 4000 and others say to new highs. Some think interest rates will remain near zero while others say they are going to go through the roof. Some say Crude Oil is in a new rally while others think we have not seen the lows. Some say China is the best place to put your money while others say its a bubble that only the USA rivals. MOST say the US dollar is going to collapse while others say it is going to be the surprise of 2010. Some say that the current USA administration is the best thing that could have happened to the USA, while others think it is being transformed into a SOCIALIST state that will rival and exceed the European and Canadian policies and that this nation will NOT recover and its changed the landscape forever.

LETS ZOOM IN ON THE 60 MIN CHART OF FEB GOLD

We can see that the bounce off the 12/22 lows produced a nice IMPULSE move into the 27th, and the pullback into the lows last week was a controlled pullback, not a straight down crunch like we saw earlier in the month. We also see for the first time price has been hanging around the yellow moving average vacillating above and below it. The tiny blue and purple averages moving back and forth above and below the yellow moving average as the price has now arrived at a TOTALLY NEUTRAL position here in the very short term. A look at the chart shows that the price of gold is about the same as it was on 12/18 ---- just before the holidays. In many ways, the last two weeks of analysis must be taken with a grain of salt as it is not representative of regular market action. That is the one thing we need to be aware of when we ANALYZE --- that it is prone to giving false signals. The fact that gold has not been able to mount any rally past the yellow moving average in almost a month has come a long way to adding equilibrium back to the gold market and the incredible rally it had last fall.

One of the things we emphasize is that gold has a seasonal pullback in most every season. The autumn correction did not begin until very late this year (typical in a bull run). I can't help but look at the chart above and see a LOW PRICE PRINT on December 22nd.............the FIRST DAY OF WINTER. The winter season is under way full force here in the Northern Hemisphere and that suggests that prepping for the winter leg of the rally in the metals is what we now need to keep an eye out for. Cycles suggest the best time for lows this month is right now FOR GOLD. This in in conjunction that every BEGINNING OF THE MONTH since SEPTEMBER have shown gold to be the strongest and rallies have come forth from this timeframe. Now the ZOOM IN CHART HERE ON THE 60 minute is suggesting that gold might be due for another new month rally. The 1070-1115 area is kind of a neutral zone.........and one can argue all the way to 1125. In fact if we try and quantify the short term.........since price is unchanged since 12/18, a neutral reading certainly is descriptive of where we are. This also indicates that this 1095 area is KIND OF A PIVOT point for traders and short term followers this week.

What next ?

Monday's action can go either way. WEEKLY SUPPORT IS THE 1070-1086 area with the key area at 1075-1085 area. Any time we are near that area the danger of breaking down is high. On the other side, if we could just get above the 1105 area, we think the odds for rallying a few days would significantly increase.

We've drawn a aqua channel in on this downtrend and as we can see gold seems to indicate that the selling has abated and the pressure is shifting to the upside of this channel in the very short term.

This puts the odds good that Monday should produce a rally attempt to bust through this area near the 1102 - 1103 area. Unless we fail there a quick rally to the 1110-1115 area would be the most likely course for Monday.

Thus RESISTANCE for Monday will be the 1103-1105 area and the 1110-1115 area. One of these two areas should be the Monday attempt.

AS LONG AS WE Don't CLOSE BELOW the 1095 area Monday could begin a rally attempt..........that is successful could lead to a mid month high towards the 1150 area.

BOTTOM LINE: Odds favor another bounce attempt to begin on Monday. Critical is to get above the aqua channel line and last weeks highs circa 1109-1115. Lets see if we can get the bounce going. Session support is the 1085-1095 area on Monday.

Watch the upper aqua line at the 1103-1105 area...it is the minimum requirement for a bounce and is a MUST get above area. Odds favor the bounce attempt...........lets see what gold does at this first level resistance areas.

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Daily Gold December 30 2009 9:30 PM EST USA TIME

So far the scenario for the week has played out. We were looking for a transition week in the 1090-1120 area with back and forth testing of key area. We got out bounce and our pullback and now gold sits at the make it or break it short term. BUT THIS IS ALSO A MEDIUM TERM AREA where KEY UPTREND SUPPORT is being tested. We will be doing a medium term update over the weekend. THE IMPORTANT THING for now is this 1070-1090 Medium term support area that gold is fighting in. It is an area we identified in early December as a potential target of importance. The fact that gold has been bouncing at this area for the past week confirms it. We were looking for the pullback to complete and favored higher prices if we could move above the YELLOW moving average on Wednesday but it just never materialized as three times we hit it but gold could not BUST ABOVE IT. Now we move into Thursday and ask the same question........its the pullback complete and another bounce attempt is about to develop?

Last nights update said to watch 1086 - 1090 as KEY POINT. The low registered at 1086.60, within 60 cents of our lower range projection target. From there gold bounced right back above 1090 and has not been below it since.

We're trying to discern if this is a short term bottom and we're waiting for price to provide clues. Lets look at the chart of the 60 min Feb Gold on our alternate chart. I was saving this chart for the weekend update, but due to the potential of moving higher, decided to print it tonight.

WHAT NEXT ?

We've arrived at our first medium term support a VERY important area. To the left and bottom of the chart is the original breakout to new highs in early October and a pullback into month end retesting that PRICE AREA. On a medium term basis we are now witnessing the same thing ----- a pullback to the breakout area. You can see that the low at 1075 from last week (top Red arrow) is the same price area (if you look to the left of arrow) where there was a big move up and above the previous triple top of October. THE "POINT OF RECOGNITION" if you will. From there the final leg up to 1227 occurred. The CORRECTION we've had has brought the price back to the SAME AREA. In other words on a medium term basis, we're RETESTING the breakout point. THE chart suggests that this price area is the 1020-1060 area. Odds greatly favor a bounce of 1-2 weeks should be near or at hand, and should be developing within this price range. I will elaborate more on the weekly and monthly report this weekend. What it currently means for the short term is we either turn here or face one more leg down into the Jan 5th-7th timeframe.

Let's zoom in deeper......... to see if there are subtle changes.....

For the first time LOOK how the TINY PURPLE moving average has made a move above the fast Yellow and how Tiny Blue is flanking it underneath fast Yellow. THIS IS TINY purple's first move above FAST yellow since the sell off began. THIS is a subtle hint that gold downside MOMENTUM is finally showing signs of SLOWING. The other very subtle hint is this. Look at each bounce previously how once it would peak the SELL OFF would be sharp and STEEP. Not this time. it was still steep, but not sharp. Look how the sell off is bouncing above and below the fast yellow average. Other sell offs were away from it HARD and fast. This is very subtle I know but these are the type of clues one looks for to determine potential TREND CHANGES.

WHAT ELSE ?

Short term CYCLE BOTTOM POTENTIAL in this time frame was discussed last night. We mentioned 48 hours. We are down to 24 hours now. Given the New Year week, I have less confidence in it, and as we know, cycles don't work to the exact time every time, but it is another subtle clue to consider.

Yet another reason is the fact that the 1070 area IS A MAJOR MEDIUM TERM SUPPORT AREA. Now I'm not saying that the LOW IS IN PLACE .........because that's not what we try and do here is pick bottoms. What I'm SAYING IS THIS:

This current area has BOUNCE and POTENTIALLY RALLY potential for THE SHORT TERM and potentially for the medium term. If its a short term bottom............odds favor we rally from this area. If its a medium term bottom and we are going to get it now.........then we have another leg down to go. At least that's the thinking tonight. WE WILL ADDRESS THE MEDIUM TERM OVER THE WEEKEND FOR INVESTORS.

BECAUSE of the holiday, I'm kind of hoping nothing happens on Thursday so we can better analyze when we get back on Monday.

Lets review what we LISTED to look for last night for a short term bounce and potential rally back up to the mid 1150's. Here are the four points.........from last night

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1) GOLD moves right back above 1100 and the tiny blue, tiny purple and YELLOW MOVING AVERAGE.

2) Tiny blue and tiny purple moving average MOVES ABOVE FAST YELLOW MOVING AVERAGE.

This will be the first sign of a potential bottom in place and a rally to form in gold over the short term...... THEN :

3) GOLD needs to get back above the WHITE HORIZONTAL LINE AT THE 1110-1115 area................ this will greatly tilt the ODDS TO THE SHORT TERM UPSIDE...........

4) GOLD moves above the 1125 area exceeding the highs of last week and the GREEN MOVING AVERAGE. This will provide impetus for gold to rally towards the 1150 area where the next key area.

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Status:

1) We are above tiny blue and touching the fast yellow........but we are below 1100 and tiny purple.

2) Tiny purple is above fast yellow average.........but not tiny blue.

3) remains below this area.

4) Needs for #3 to happen.

So we can see we are near overcoming points 1 and 2. If we move above 1105, points one and 2 will be complete and odds increase to the upside.................... a move above 1110-1115 and #3 increases odds that #4 will happen and we move to a test of the 1140-1150 area on this bounce.

With LOW VOLUME ANYTHING CAN HAPPEN, and NOTHING CAN HAPPEN. It can go either way. Keep that in mind if you must trade or buy or sell tomorrow.

BOTTOM LINE: GOLD is about to set off on the next short term move. It has not decided which way it wants to go just yet.........but it is suggesting that a break of last weeks low would indicate another drop to a new correction low to complete in early January.

AS long as we hold 1086 and NOW move above 1100-1105 ODDS SHIFT THAT A BOUNCE BACK TO AT LEAST test the 1115-1120 area will be under way. ODDS SUGGEST THAT THE 1120 area will be taken out and a move towards 1150 should be UNDERWAY.

SUPPORT 1070-1086

RESISTANCE 1099-1105 then 1110-1023. 1110 IS THE KEY PIVOT AREA where the white horizontal shelf line is.........its the zero line for the BULLS/BEARS short them. Above and the BULLS start taking control of the short term. Below it and the bears still control.

ANY failure at 1100-1105....and then 1085...........WILL IMMEDIATELY PUT ODDS FAVORING LOWER TO 1070-1075 with potential for more.

We are still in transition and Thursday is the day before New Years.........so a forecast if murky at best. We are going to have to pick it up Monday

Lets see what gold does at the fast yellow moving average. The chart pattern and time cycles have the Odd's FAVORING a CYCLE LOW and a SHORT TERM RALLY TO BEGIN that could extend for a week or two on the short term. The ideal time to start is either from here................or one more leg lower into Jan 5th - 7th.

If we break last weeks low and 1070........odds favor the low on Jan 5th - 7th. If we can crack above the 1110-1115 area............odds favor we rally toward 1150's.

WATCH SILVER TOO.................BELOW 16.60 -16.75 will warn that the ODDS will favor gold to move lower as well. Silver almost buckled again today..............hitting 16.74 .........RIGHT AT MAJOR SUPPORT. It's chart pattern is SHOWING EITHER A TRIPLE BOTTOM............suggesting a rally........OR A BREAKDOWN. A break in silver will hint that gold will too.........but a HOLD NOW hints that gold's bounce could be a 50-60 dollar move.

We'll pick it back up Monday.........

HAPPY NEW YEAR............

Let us all prosper in 2010 @@@@@!!!!!!!!!

Bill

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Daily Gold December 30 2009 1:30 AM EST USA

Our Tuesday update had the odds favoring a pullback for Tuesday in the 1090-1100 area. The exact low since that update has been 1090.50.............just 50 cents shy of that lower range area. We discussed the most likely place for this bounce to fail would be the 1115-1125 area. The high for the week before this pullback was 1114, just one dollar shy of the 1115 area. Our comment last night was from a PURE TREND AND SYMMETRY point odds favored a peak and a move lower.........and that was what developed.

Now that we've hit 1090, we suggested on Tuesday that odds would favor the resumption of the bounce back up. But we also mentioned that we wanted to see the pullback as MILD for us to favor the bounce resumption. And that really is the question of the day for Wednesday. The last 4 hours has seen gold accelerate again and now that we've hit 1090, we are questioning whether gold can actually hold here at 1090 and stage a bounce? Our resident star gazer Jim Cate reports that we have key TIME days here with an eclipse and full moon over the next 48 hours. Anyone who has bothered to study these astrological phenomena know that there's definitely too much coincidence in highs, lows, and big move days to shrug aside. SO WE EITHER BOTTOM HERE IN THIS AREA or GOLD is about to make another leg down in the short term.

What next ?

The circled red area shows how the pullback has increased its downside velocity. Look how all day, while we were above the fast yellow moving average that the high was a choppy kiss to the underneath of our key resistance WHITE horizontal line and that tiny blue moving average contained the entire rise with that kiss on White resistance a slight blip above tiny blue. It proved to be the high of the day. OF KEY IMPORTANCE IS THAT TINY BLUE, TINY PURPLE, and FAST FAT YELLOW MOVING AVERAGES ARE ALL CONVERGING AT THE 1100 area with gold price just below that area. SUPPORT IS THE GOLD HORIZONTAL LINE that has been on our chart for the better part of a month. LOOK how it provided the exact double bottom low last week. THUS WEEKLY, MONTHLY AND MEDIUM TERM SUPPORT comes into play here. A failure here and it would open the door to the 1020-1050 area in gold as the next medium term stop. THE NEXT 50 - 75 DOLLAR MOVE IS ABOUT TO DEVELOP and GOLD IS SETTING UP and is in the process of deciding which way it will be. UNLESS GOLD GETS ABOVE ONE of these moving averages and fast, this market will move down on WEDNESDAY. HOWEVER------------IF GOLD CAN NOW GET ABOVE TINY BLUE, TINY PURPLE and FAST YELLOW above 1103............then the potential for a SHORT term bottom and the next leg of the bounce will be in play. THE RUBBER MEETS THE ROAD AT THE WHITE horizontal line in the 1110-1115 area and the 1119-1125 area where last weeks highs and the medium green moving average converge.

BOTTOM LINE: The pullback we've looked for has developed..............THIS IS WHERE GOLD NOW MAKES ITS SHORT TERM MIND UP. We discussed at the beginning of the week how the odds favored a transition week where gold would test its upper and lower resistance areas in the 1090 to 1125 area..........and that has been pretty much the script. Now that all of the PROJECTIONS for the week are complete.........the transition, the bounce, the pullback into today...............NOW GOLD MUST FESS UP and make its short term mind up. IF gold fails to get support near this area, then the bounce failure we saw on 12.16 will be repeated again. Because of the convergence of all the factors of a daily, weekly, monthly, quarterly, yearly, and DECADE CLOSE on the charts combined with key geocosmic influence.....it wouldn't surprise me to see a good sized move develop starting now thru Jan 5th - 7th.

Gold has made major lows at the end of Aug, Sept, Oct. (November produced a blow off high). Therefore, cyclically, a SHORT TERM BOTTOM IS DUE HERE in the next 48 hours from many angles. However, that does not preclude the fact that we don't drop from here first. Just as November produced a time cycle INVERSION and produced a 30 day run up...........GOLD HAS NOW equalized that blow off top by producing an EQUAL 30 DAY CYCLE LOW. The ideal time for that turn is near and could BEGIN at any time. SINCE we've reached key weekly support area again at 1070-1090 and that the Wednesday low is 1090...............that time might have arrived tonight. But as we've done in the past, RATHER than guess this is the LOW again, we want to see the following action occur.

1) GOLD moves right back above 1100 and the tiny blue, tiny purple and YELLOW MOVING AVERAGE.

2) Tiny blue and tiny purple moving average MOVES ABOVE FAST YELLOW MOVING AVERAGE.

This will be the first sign of a potential bottom in place and a rally to form in gold over the short term...... THEN :

3) GOLD needs to get back above the WHITE HORIZONTAL LINE AT THE 1110-1115 area................ this will greatly tilt the ODDS TO THE SHORT TERM UPSIDE...........

4) GOLD moves above the 1125 area exceeding the highs of last week and the GREEN MOVING AVERAGE. This will provide impetus for gold to rally towards the 1150 area where the next key area.

The key to this correction and understanding is that we are in a MEDIUM TERM correction, one level higher than the short term corrections we usually see. We've been expecting it to last 2-6 weeks. We are in the process of completing nearly 4 weeks. What I'm getting at is while the SHORT TERM DOWNTREND MAY BE NEAR AN END, the potential that the medium term correction is not done is a valid CONSIDERATION that must be taken into account if one is looking to add to positions or establish new ones in their favorite gold instruments.

MEDIUM TERM PLAYERS/INVESTORS who are looking to ACCUMULATE need to consider the potential for gold to possibly test the 200 day moving average during this medium term correction. While its not fully required to end the medium correction, it is a possibility that could develop.

SHOULD GOLD NOT MAKE A TURN HERE WITH SHORT TERM PRICE over the next few trading days...........THEN THE POTENTIAL TO INVERT another short term cycle turn into another drop might provide the impetus for another down leg that takes us into mid January before the medium term bottom. IF that were to develop, then the potential for gold to trade down to the 980-1030 area is a consideration and a potential event for medium term investors.

These are the two scenario's we are faced with. A bottom here.............and a subsequent rally or another 2 weeks of a protracted downtrend before the winter rally ensues. A technical case can be made for both and we hope to delve into this again over the weekend.

Short term players should be ready to act if this is a bottom and medium term players can do one of two things. They can either wait for more confirmation.............which means buying higher........OR........THEY CAN NIBBLE and just add a bit here if we turn at this juncture...............and add another layer should we correct lower.

IN SUMMATION ------------ A KEY TURN POINT FOR GOLD AT THIS PRICE AND TIME IS AT HAND. Playing it requires a thought out plan and a decision whether its a short term trade, or a medium term trade. I suggest medium term folks who decide to add should do so lightly. Short termers who add would be wise to USE A STOP BELOW THE LOWS of last week................and to raise stops to even once a short term rally gets under way.

WHAT WE'RE LOOKING FOR:

----------------gold holding here............and moving back above THE tiny blue, tiny purple and yellow moving average.......holding.............then moving above the white moving average above 1110-1115.

THOSE WHO OWN ZERO GOLD...........and are newbie's. This is where an initial small position should be ready to be taken................with a hope that gold will actually pullback further where more can be added.

FROM MY END....................barring a little nibble..................I would much rather wait until next week the New Year to add but in the end it makes no difference. Hopefully, I get some quality time this weekend to review the medium term outlook as well as the upcoming 2010 year.

BOTTOM LINE: The pullback should be complete..........WATCH 1086-1090.......... IF GOLD can now move above the first set of moving averages listed above..........circa 1105.............. ODDS WILL FAVOR HIGHER ON WEDNESDAY.

Those on our intraday email list will get a 10 am or 11am update tomorrow morning.

TRADERS................if you place a position........make sure you use a stop below 1085...........or below last weeks lows.

LETS SEE IF GOLD CAN HOLD AND IF THIS PULLBACK HAS ENDED..............and the next bounce gets underway.

CONTINGENCY PLANNING:

Should gold fail at the 1105-1115 area........and a subsequent break of today's lows occur .............or last weeks 1070-1075 area..........then we would expect gold to make another push lower.

ODDS FAVOR AN ATTEMPT BACK UP ON WEDNESDAY..............WATCH THE 1100-1110 AREA CLOSELY.

FINALLY...........LOW VOLUME LEAVES EITHER DOOR OPEN DUE TO THE HOLIDAY AND MAKES THE CALL MUCH MORE DIFFICULT. That's why we need to watch the #'s closely at support and resistance.

SUPPORT 1070-1090.. (intraday support at 1086-1090)

RESISTANCE 1100-1105 1109-1115 1119-1123.

Be careful.........and watch what gold does at the 1100-1110 area on Wednesday where the moving averages have converged. Moves above that tilts the bounce resumption in play and suggests the Tuesday pullback is complete.

While the short term trend remains bearish, Odds favor higher on Wednesday if we can bust thru the yellow moving average and the next leg of the bounce would be underway. Failure to hold above the moving averages.............and a break back below today's low will suggest another test of the 1070 area and potentially lower.

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Daily Gold December 28 2009 9:00 PM EST USA

In last nights update we were looking for a Monday peak in the 1110-1120 area and we even highlighted the 1115 area as a key price point. The high turned out to be 1114. We stated that if the 1110-1120 area was indeed resistance the most likely pullback would be the 1095-1100 area. On Monday after peaking at 1114, we got to as low as 1102.30 before bouncing back towards 1110.

The 60 min chart shows how thus far all we have done is make it back to the yellow moving average and the white horizontal line as we expected from this bounce. Now it has pulled back to just above 1100, and price tonight is trying to establish support above the yellow fast moving average. This is just about the same position where GOLD had a failure at the 1140 area on about the 12/17/09 timeframe. The setup is very similar. THUS, the most likely spot for the gold bounce to fail if it is to be the case again, would be the 1115-1125 area.

what next ?

Obviously, we want to see gold hold the yellow or the TINY purple average so as to allow this bounce to continue and potentially become a short term rally. IF we can hold here during this pullback, and get back above today's highs, it would set up a challenge of the 1123-1125 area (last weeks highs).

ODDS SUGGEST A MOVE ABOVE 1125 would favor a test of the 1135-1150 area. The question is what are the chances of moving above 1125 ??? Is the rally we saw it and the bounce is already complete ?

As of tonight we are not sure. From a PURE TREND and SYMMETRY standpoint the odds would favor a peak here and lower price.

From a CYCLE and TIME standpoint, the odds favor a rally towards the end of the month.

Odds favor a pullback to the 1090-1100 area on Tuesday and from there, gold should make another attempt at exceeding the white horizontal line and the 1115 area.

If GOLD can get above 1115 - 1123, a rally towards the 1135-1148 area would be the odds favorite.

Bottom line: Tuesday's action will hunt for initial support from this bounce. If the pullback is mild, odds favor the bounce will continue.

AS OF RIGHT NOW, GOLD NEEDS TO EXCEED 1115 - 1122..............until it does, TREAT THIS ONLY AS A BOUNCE. Gold is leaning towards a rally here...........BUT PRICE HAS NOT CONFIRMED YET. So the Tuesday status is still....................LOOKING for a bounce attempt...............but the SHORT TERM TREND IS STILL IN BEARISH MODE. The short term trend goes from bearish to neutral on a close above 1125.

Odds favor a pullback to the 1090-1100 area from the peak, and then another attempt higher. AS LONG AS WE REMAIN ABOVE LAST WEEKS LOWS.......................THE BOUNCE POTENTIAL IS FAVORED.

Any move below 1070 will suggest a test of the 1030-1055.

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Daily Gold December 27 2009 8:30 pm EST USA

Last Wednesday gold finally bounced off our GOLD HORIZONTAL SUPPORT LINE that we have had on our 60 minute chart for a while now. As you can see by this 60 min chart of hourly closes, the gold market bounced right on that line and another short term bounce attempt is underway. So far, this one seems to have the best potential of all attempts thus far. In total, gold dropped 150 dollars from peak to bottom since the highs of December 4th. The short term trend has been bearish since that day, but is now close of finally coming out of bear mode. Since we are in another holiday week, it remains a market that can be a bit more difficult to forecast. With that said, here's what we are looking for on Monday.

As you can see by the chart, the bounce so far has made it past the tiny blue and purple moving averages and has arrived at the 1110 area where the horizontal white line and the fast yellow moving average are converging at. Interestingly this is the price zone where the 50 day moving average also resides. Thus the 1110-1125 area is shaping out to be an important area for Monday. While 1110 area has the resistance stated, the 1123 area is the high of the last rally attempt off the 1095 low. So these two price areas are the first important test for gold to face on Monday.

Initial support on Monday is the 1093-1096 area. DAILY and WEEKLY AND MONTHLY SUPPORT IS THE 1070-1080 area..............In other words, last weeks lows (plus or minus 5 bucks) is an important area. Should we break below the 1070 area, the next support areas would be the 1020-1030 area. At this point, we are not looking to make lows below 1070, but are just relaying the turn point should it play out.

In an normal week, odds favor this week as a transition week where gold attempts to keep the bounce going. We favor the TESTING OF SUPPORT and we think a range in the 1090-1125 area is where most of this week will be spent. We are a bit reserved because of the holiday week to nail it down to that however.

Our normal expectation is for gold to peak in the 1115-1123 area and begin a pullback to test support. . Should we exceed the white line and the yellow moving average near 1115 and rally to the low 1120's, it would increase the chance that gold could move higher towards 1133-1151.

Watch the fast yellow moving average and white line near 1110 and the high last week at 1120ish as first line resistance.

In sum, we've gotten the bounce we were looking for, but the question as to whether this correction is completed is a much more difficult question to answer. Thus far the market has only shown a bounce and if you look at the chart we can see that the green medium moving average has crossed below the SLOW RED average. This is suggestive that the correction could extend into the January timeframe and that the 1138-1148 area will be a tuff nut to crack. Should we exceed the 1125 area we would expect 1138-1148 to provide the highs for the week. We think its one of those two areas.

So far the rally from the lows is constructive. Odds favor a peak either at 1110ish or 1120ish on Monday and support at the 1089-1096 area.

Bottom line: Gold's test of the white line and the yellow moving average on Monday suggests initial resistance there at first in the 1110-1115 area or the highs from the last bounce attempt at 1119-1123. It comes down to whether gold can overcome that area and most likely gold would pullback from that area back to the 1095-1100 area to test some of the areas we overcame on Thursday.

Looking more at the short term and not just Monday, it seems that the commodities in general might have an upward bias this week. The dollar is also near a position where a pullback should develop back towards the 77 area.

I look forward to next week when things return to normal. Let's see what Monday brings in a week of potential transition. A rally towards the 31st thru January 4th is the initial cycle expectations but again, the markets will not be at full steam this week. Keep that in mind.

POSITIONS:

A few have asked about whether this is a time to buy? It is such a difficult answer because we all have different circumstances to consider. If I was heavily long, I would not be adding here. However, If I was cash rich, it would be a nice place to add a little bit. IF I was a newcomer to the gold market it would probably be a good place to dip the toe and take an initial position but would make sure I give myself plenty of room to average down should the pullback continue. If I was a trader, I'd be watching that 1110 ish area to see if gold resists there........................and I'd be watching for a pullback towards 1085-1090 to potentially put a small short term play on with stops below last weeks lows.

Do you see what I mean how to play the market is not and easy black and white statement? Each individual investor has a different set of circumstances he/she have to evaluate.

There are times when ITS AN ALL ABOARD.............. Such was the case in July at the 915 area and at the beginning of September at the 955-960 area and once again at the 1010 area.

Could this be one of those areas? Yes. It could. But it is one that it is too early for me to proclaim a low and I am also reluctant to TAKE POSITIONS and make longer term decisions during a time when we are watching price during a holiday week.

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Daily Gold December 23 2009 12:01 am EST USA TIME

Is Gold ready to Bounce --- to a higher price per ounce?

It is often said that the stock market will get Santa Claus rallies this time of the year. Is Santa Claus coming to the COMEX to end the week ?

The big question today is obviously ........is gold ready to bounce or rally? A lot of the "timers" are saying yes, a short term bounce in gold.

What do we say? Are we "timers" at Goldtrends?

There are a lot of market timers in the land of the internet and indeed, I certainly respect them, listen to them, look at their work and try to absorb as much as I possibly can. I try to look at each and every angle. We we're blessed with a nice "bearish" short term signal on December 4th, the first one since September and right at the top.

So........are we "TIMERS" ?

No. We are "Trender's" And there is a big difference.........and yet so subtle. And that difference is we try and "FOLLOW" price where it goes and only turn bullish when the "TREND" has indeed really turned.

Therefore, now that we SUSPECT a turn is due, let's make sure price has indeed turned. Recall that the rally to 1144 was a rally that failed and we've dropped almost 70 dollars since that bounce failure. During that bounce, the short term trend remained "BEARISH" and did not provide a false BUY if you will. We did so because we wanted PRICE to give us a confirmation that the trend had changed.

THAT IS WHAT WE NEED TO DO THIS TIME AS WELL. We need to confirm that price is indeed reacting to short term factors. We are going on the premise that we want to FOLLOW THE TREND. If we do that, we wont pick the EXACT BOTTOM.........but we more often than not, should be able to jump on the trend.

Let's get right to it. IS IT A BOTTOM ?????? LETS REALLY ZOOM IN DEEP DOWN TONIGHT.

The chart below is a tick chart of February Gold. It covers from about 12/16/09 to today. First, let's look at the last bounce. See the oval circle on the chart near the middle? See the one at the bottom of the chart ? That is where we are right now on a potential bounce. For those of you interested in charts there's a lot one can absorb here. Lets look at the last time gold tried to bounce and the interaction on the charts.

HOW A BOUNCE FAILS .........and SELLS OFF AGAIN. Let me describe a bounce on the tick chart below.

First, the two red arrows......a double bottom. Then, the aqua arrow.........where the short term moving average yellow.....and tiny blue and purple average go above medium GREEN moving average and price bursts above it too !!! WE HAVE A BOUNCE GOING ON.

But at the 1120 area, a TRIPLE TOP (see long red arrow). Then a sharp drop develops.........and price goes through all moving averages in a very short amount of time......and can't recover. (see gold arrow)

The next selloff was on. PRICE REMAINS BELOW yellow moving average all the way down.

Now we've arrived to today. For the first time, price has climbed back above the yellow moving average. Look how price is bouncing in between the yellow and green moving average, trying to hold this first price support area. WE HAVE ANOTHER POTENTIAL PLACE WHERE A BOUNCE CAN DEVELOP.

WHAT NEXT ?

Now we need to see price hold and move higher. Lets look at the last arrow here on the for bottom right. If you look closely you can actually see a mini reverse head and shoulder and a subsequent five wave advance to the top of he green moving average. It is comforting to know that price patterns are evident on all time frames, even the tick charts. In any event, price now needs to bust above the moving averages to confirm price is serious. As you can see by the OVAL on the left of the chart, a move in between the MOVING AVERAGES on this minute timeframe is not a guarantee of a trend change.

As you can now see by where we area now at the current oval on the chart..........WE ARE IN THE EARLY STAGES OF A POTENTIAL BOUNCE. Price has not confirmed ...........so far.

WITH A LOT OF PLAYERS GONE FOR THE HOLIDAYS........IT BECOMES VERY DIFFICULT TO GIVE AN ANALYSIS OF WHAT SHOULD HAPPEN WITH MUCH DEGREE OF CONFIDENCE UNTIL THE NEW YEAR BEGINS IN JANUARY.

REMEMBER ..........AS SOON AS A BOTTOMED IS FISHED OUT.........THOSE WHO HAVE BEEN WAITING TO CLIMB ARE GOING TO ALL TRY AND PILE ON.............THE ONES WITH THEIR HANDS ON THE BUY BUTTON SINCE LAST SEPTEMBER.

THIS COULD IMPART A STRONG REACTION UP FROM THIS LEVEL for a few days and quickly PUT GOLD RIGHT BACK AT THE 1150 area.

What I am getting at it this.

Any move like this WILL BECOME VERY TEMPTING TO LOAD UP............and the higher the price is when you do.........the more important for it to be when the rally resumes, not just bounces.

BOTTOM LINE:

We expect a bounce. BUT THE SHORT TERM TREND IS STILL BEARISH. We need to see how price is going to react ........BUT THE PROBLEM WITH THAT IS CHRISTMAS IS STRAIGHT AHEAD and the volume very low.

Finally, the potential for gold to just meander in a tight range to weeks end is also very possible.

For Wednesday support is the 1065-1078 area........and resistance is the 1095-1110 area and then the 1122-1133 area. Odds favor the 1095-1110 area will be where we see the highs of Wednesday.

ODDS FAVOR A CHOPPY DAY........CIRCA 1075-1095 for Wednesday. The potential to be quite due to Christmas very possible.

======================================================

Daily Gold December 22 2009

Since the drop of Thursday our short term update has focused the outlook on a chop pattern above and below the 50 day average as the odds favorite. Odds favored a test of initial resistance for Monday and was the 1119-1133 area. We said that as long as we remained below that area that probe's lower were still a potential. The high was right at the 1119 area as we kissed the tiny purple moving average and another straight down move of well over 30 dollars occurred Monday. We can see by the chart that the CHOP forecast for Friday and Monday above and below the 50 day (at 1106) was also on target.

What next ?

Our outlook also stated a drop below 1090 could usher in another 20-40 dollar drop. Look how gold is just wavering here slightly above 1090. Going into Tuesday gold remains below all moving averages again. It is now also below the white line support and barely holding 1090. The short term trend (which turned bearish on 12/4 for the first time since September) remains in bearish mode. Support remains the 1070 to 1090 area that we have been using now for a few weeks. Additional support is the 1030 area. The 1080 price area also has the potential to provide on Tuesday. Resistance is now the 1110-1120 area and the 1144-1155 area.

Bottom line: We must support here and begin a move up to the 1110 area immediately or face another 20-40 dollar selloff. The 21st and 22nd are key dates to the stargazer's and Dan on the Gann blog points out the Winter solstice occurred today to officially end the Autumn season bears watching. (I agree). On the silver update, Monday's update discussed the potential that the short term cycle low that was due last week might have already played out and the bounce we saw into Wednesday was it. It is even more evident on the silver chart. With the situation tonight........... THE potential to sell off here towards 1030-1070 is GROWING BY THE HOUR. The shorts have a low volume market this week. ASK YOURSELF....if you were them and were in this much trouble, wouldn't you throw everything at this market right now?? I would.

Until we climb back above the white line.....and then above our moving averages, the price can still move lower and could accelerate on Tuesday. Any break below 1088 would suggest a move to 1070-1080 for Tuesday. IF WE CAN HOLD 1088.....then look for a move back up towards the 1105-1120 area and a continued chop above and below the 50 day average.

Tuesday and the 1088 area seem to be a critical area. Moves below 1088 suggest 1070-1080.

Extreme support all week is the 990-1025 area.

Also concerting is that the DOW and the US DOLLAR are both in rally mode. However, we will wait until the new YEAR and volume returns to make such observations gain credibility.

==============================

Daily Gold December 21 2009 (12:15 am EST USA TIME)

Lets get right to it tonight.

We can see on the 60 min chart of February gold that price has bounced off our white horizontal channel line that is basically at the 50 day moving average. We can see TWO PROBE of price reaching a low of about 1095 on Thursday and 1098 on Friday, holding the initial support areas. Coming into Friday our outlook was for a chop above and below the 50 day average. We gave the 1115-1120 area as the first level resistance bounce we were looking for. The high at 1119 satisfied that initial bounce we were looking for. Last week, we looked for a short term low in the Wednesday, Thursday area, and when we did get the bounce we suggested a break of 1100 would clear a lot of stops below the 50 day average.

With two price probes below, the key this week comes down to can GOLD TURN THE CORNER HERE ???? We remain concerned at the persistent weakness that gold keeps exhibiting on every bounce and the odds of going into a U shaped bottom on the short term is certainly a potential seeing that the upcoming volume is about to shrink drastically until the new year kicks in. Short term calls will be tricky during this time.

RESISTANCE 1119-1133 where the shortest moving averages are and 1144 -1155 where the red and green moving averages converge, and finally the AQUA momentum channel line at the 1170-1180 area.

Support is the 1070-1090 area and initial on Monday is the 1098-1105 zone.

For Monday, watch the 1105-1110 area. Anytime we are above 1110, it means the bounce attempt is on the way and is heading for towards our resistance areas for a test at 1122-1133 with potential for a move towards 1145 area.

We have a seasonal change from autumn to winter as the solstice takes place. The next two weeks are a transition to that timeframe and the new year as well in the markets.

There will be a lot of shifting going on as portfolio's get reset for 2010.

For this week, with the double low's below 1100 this week, odds favor a bounce and test of the 1120-1133 area initially. This will be followed by the most important area of the week the 1144-1156 area where the red and green moving averages along with the highs of last week are. We would expect to encounter resistance when we get near those areas.

Bottom line: Look for a bounce in gold towards the 1120-1130 area and or the 1144-1156 area. As long as we're above 1105-1110, we will be in bounce mode.

ANY MOVE BELOW THE 1090 area will most probably usher in another 20-40 dollar leg down in gold. USE 1110 as your pivot point this week. THE WHITE HORIZONTAL LINE ON THE CHART is where the equilibrium point is. While we are above it, the potential to bounce is favored.

Lets see if the bounce can develop on Monday. Failures at the 1120-1130 area would keep the bearish side in play should we move back BELOW THE WHITE LINE afterward.

Odds favor we spend a few days bouncing around the 50 day testing overhead resistance 1120-1130. Lets see what gold does there.

This week is the ------------CAN WE BOUNCE BACK WEEK ????? And that's what its all about.

WATCH THE HORIZONTAL WHITE LINE ON THE 60 MIN FEB GOLD CHART ON THE DAILY BUTTON FOR SHORT TERM. Above it odds favor the bounce to continue. Below it leaves the downside still open on Monday.

Moves above the reaction highs at 1148 would increase the potential of moving higher into month end.

BOTTOM LINE: We expect a bounce............. but we need to GET ABOVE THE FIRST SHELF RESISTANCE at 1122-1133 area first. The last BOUNCE FAILURE was at 1144 and that area will be the KEY area should we overcome first resistance this week. UNTIL WE MOVE ABOVE 1122-1133 the potential to move lower can still develop.

BARRING bounces the short term trend remains bearish. A BREAK OF 1090 WOULD PROBABLY SET A 20-40 DOLLAR MOVE LOWER.

With that said, conversely, the cycles still favor a bounce in gold this week, but we want PRICE TO BEGIN TO SHOW itself above our moving averages BEFORE WE BEGIN TO FAVOR THE ODDS WITH HIGHER DAYS.

Friday was only a stabilization day that stopped a large drop from Thursday and this market still needs to do some work.

ODDS FAVOR A RANGE DAY OF 1115-1125 on the upside and 1100-1105 on the downside as gold hangs out at the 50 day average and the WHITE HORIZONTAL LINE.

Let's see how it plays out on Monday. Remain defensive. Gold is not out of the woods on the short term until it starts getting PRICE ABOVE THE SOME OF THE MOVING AVERAGES.

WATCH THE WHITE HORIZONTAL LINE............. its the spot we should go back and forth with on price until the next move starts up. So look for the chop to continue potentially one more day.

=============================

Daily Gold December 17 2009 (10:00 PM EST USA)

We made our full case over the last few days and especially last nights update for this potential selloff warning that breaks of 1122 would provide odds of another push under 1100. We hit 1095 today. For a few weeks we've been using 1070-1090 so we are close. The 50 day average got flushed of stops today which we also suggested would be normal. We peaked right at 1143.50 Thursday only 50 cents from our 1144 resistance. We laid our the case for the Euro............its was down some 200 pips today. We've remained BEARISH waiting for price to confirm. The short term trend has been bearish since 12/4 and about $100 dollars.

What next ? We're at shelf support..........with one probe down into it. We suspect a range bound day as laid out on our front page of the website. Here is that reprint.

Friday's Outlook....................

Lets put it in perspective. So far, we've pulled back to the 50 day moving average over the last two weeks. This would be a NORMAL process in most markets. The fact that we were so overbought has the market just getting itself back to NORMAL by wiping away all the excess.

As of right now, price is sitting just below the 50 day average. The short term cycle bottom is still due in this time frame. We witnessed an attempt to Turn on Wednesday. Our Daily button warned that the area where we were last night in price and in bounce was the most likely place for a failure if there was to be one.

From a chart perspective, initial support is now the 1070-1090 area with additional support at the 980 to 1030 area. 980 is the 200 day moving average and if we fail to recapture the 50 day moving average in the upcoming week then it will become the next target in this correction. But that's a subject for a weekly update. For now, should we fail to get back above the white shelf line on our chart Friday, the pressure will remain on the downside.

Resistance to any bounce will be the 1110-1133 area for Friday. Key levels with that zone would be 1110-1115 and or 1125-1133.

In the event of a panic leg down.....the stopping points are 1080 and 1030 (plus or minus ten bucks) for Friday.

BOTTOM LINE: IF WE REGAIN COMPOSURE and halt the collapse, odds favor a range day of 1090-1120. LOOK AT THE WHITE SHELF LINE JUST ABOVE 1100 as the must area to begin supporting above. A failure to climb back above the shelf support would keep the market in very dangerous territory. Barring bounces the short term remains bearish. ODDS FAVOR A CHOP DAY ABOVE AND BELOW THE WHITE SHELF LINE. (commentary continued below chart)

60 MIN FEB GOLD

As has been the case since Dec 4th, the short term trend indicator goes into Friday in bearish mode. As we did on the way up to 1200..........we must follow and respect price. In the entire drop over the last two weeks, we have maintained our bearish short term stance. We will be looking now for the next POSSIBLE TURN and BOUNCE TO DEVELOP to see if it can regain traction.

Goldtrends will be reviewing the Medium Term trend for a weekly update.

Have a good weekend.......

===========================

Daily Gold December 17 2009 (12:30 AM EST USA)

Intraday details on front web page.

Let's get right to it.

For the first time in a while gold tested upper resistance instead of lower support. Gold finally broke thru the first support area where the tiny blue and purple lines were positioned as odds favored to do so on last nights update. We targeted resistance at the 1133-1144 area initially and the high was 1142.

In time cycles we targeted the Wednesday-Thursday area as where we should get an initial bounce and where a short term cycle low is due. The question is now whether we continue rallying higher or do we still have ONE more dip to clean out the stops? Usually, the vote would be to clean out the stops and break the 50 day moving average. It comes down to whether we see the type of strength we saw last month come back to the market.

Lets take a look a the short term chart and to see what I'm getting at. The 60 Min Feb Gold chart shows the key short term point we area at. First the bottom arrows near the white shelf line. These 2 LOWS ARE IMPORTANT, and just below that is the 50 day moving average (not shown). For the short term trend however, the action is happening at the 1130ish area. Look at the tiny blue, tiny purple, and FAST yellow moving averages ALL CONVERGING UNDER PRICE TO GIVE IT AS MUCH SUPPORT AS IT CAN THERE in the 1125-1130 area. We see that tiny blue and purple have TURNED UP SLOPING FOR THE FIRST TIME IN THE CORRECTION and that TINY BLUE is crossing and knocking on the door of fast Yellow. See how price has already pulled back twice to touch fast YELLOW since we exceeded it ? This is suggestive that this is the MOST IMPORTANT POINT RIGHT NOW. This is where price bounces are MOST VULNERABLE for a failure. Many times the markets does an initial push up, but its what happens after the PUSH THAT COUNTS. On the upside, we can see how close price got to the SLOW RED average before turning back down 3 times from 1140-1142. This plays with the 1144 resistance area we gave last night and the 1144-1151 area IS A MUST AREA TO EXCEED IF WE ARE TO KEEP THE BOUNCE GOING. SO far we do not have a HIGHER HIGH yet as the last two pushes were 1148 on 12/10 and 1144 on 12/11.

So far all we have confirmed in gold is an initial BOUNCE. WE MUST MAINTAIN above THE MOVING AVERAGES at the 1125-1130 area to MAINTAIN AN UPSLOPE BEGINNING. Any time price moves below the moving averages, and takes out the 1122 low of Wednesday, THE LOWS AND THE WHITE SHELF line becomes a TARGET RIGHT AWAY. Its not to say these areas wouldn't hold either. But I grow very concerned at what is going on with the EURO and the implications that the DEBT DEFAULT SITUATION is rising and rising fast (or so the perception is). We've been going on ad nauseam about it, but we FEEL THAT IS A CRITICAL ISSUE for gold and the US Dollar.

At a minimum we now need to exceed slow RED (our slowest moving average) and the last two highs at 1148 and 1152ish.

I'll tell you what I DON'T like tonight. EVER since we moved above the fast YELLOW moving average, the price pattern has been a total chop. It's not usually a good sign, but I'll give gold the benefit of the doubt because of the initial resistance (red Average) above and the initial support (yellow average) below price. But below that......and it won't take much to end this bounce.

There is some GOINGS on right now that COULD BE GETTING READY TO PRESSURE GOLD AGAIN and it is this........THE EURO IS DOWN ANOTHER 100 PIPS TONIGHT. I suspect that the EXPOSURE to the DUBAI and GREECE AND SPAIN POTENTIAL DEFAULTS ARE PUTTING SERIOUS PRESSURE ON THE EURO. I expected a bounce to develop from the 145 area and we got about 70 pips higher today and early on THURSDAY the Euro has fallen thru SUPPORT all the way down to 144. This is now a 700 PIP MOVE IN a very short period of time. IT IS A VERY DISTURBING EVENT.

The other situation that bears watching (no pun intended) is the COPENHAGEN situation. Should the talks break down and bickering begin within.........and should a mass failure occur there it could provide some negative vibes as to the capability of world government cooperation.

We've heard of the DOLLAR CARRY TRADE and we've been suggesting and tracking the dollar now for a few weeks and the theater there is a full one. The force that the EURO is dropping is catapulting the US dollar.

On November 22nd, we made you aware of a situation that warranted attention in the US dollar and it was the massive volume that UUP (the bullish dollar ETF) was displaying.

This is the chart we published on our WEEKLY update 24 days ago.

Look at the volume expansion @@@@

MASSIVE

Then on November 30th we printed this chart on our weekly update entitled - DUBAI or Do Sell ?

Here's the chart from November 30ths weekly report showing the actual TOUCHDOWN on our major support line.

We discussed then that the 74 - 74.25 was the make it or break it point for the US dollar and as long as we held that area we could rally. We highlighted the seasonal aspects of this time of year for the dollar during the month of November also.

Which brings us to Thursday Morning............ it should be an interesting day.

RSI AT 70 for first time in 6 months.

200 day at the 79.66 area

Resistance here at 78ish first.

PRICE MAKING FIRST HIGHER HIGH RIGHT HERE..............

Support now the 50 day at the 75.50 area.

MACD SHOWS HOW STRONG the initial move is.

Here's THE POINT I WANT TO MAKE TONIGHT.

Recall we've said the only thing that could derail the situation is a CREDIT CONTRACTION. THE EVENTS OVER THE PAST FEW WEEKS HAS affected the EURO, and GOLD. It is hard to argue that. Otherwise its a coincidence.........but I think not. Not so far.

THE FACT THAT THE EURO IS DOWN so much again on Thursday morning has me CONCERNED THAT THE GOLD MARKET MIGHT HAVE A HARD TIME AT ITS RESISTANCE AREAS.

AS LONG AS THE MOMENTUM OF THE US DOLLAR IS LIKE ABOVE........AND THE EURO TUMBLING the way it is............COULD BRING A LOT OF PRESSURE ON GOLD IN THE NEXT 24 hours. But the DOLLAR itself is at a point where it must press forward or face a pullback test of support towards 75-76.

IF IT DOES NOT BRING PRESSURE ON GOLD........it will signal that gold is very strong here.

If the US DOLLAR rises any more from here, a test of the 78 area would be upon us quickly.

With this development, it is key to WATCH WHAT GOLD IS GOING TO DO HERE. Should it hold support at the listed support above............then the potential for gold to MOVE HIGHER AND FAST will come to the forefront.

There's an awful lot to chew on tonight. ODDS WOULD FAVOR THAT GOLD WOULD MOVE LOWER on such a move in the dollar and euro action. But when we contrast that a short term low is due, maybe we are SEEING A SHORT TERM FLUSH OUT IN THE EURO at 144.

We just can't be certain tonight. So we will go with the moving averages in gold.

ANYTIME GOLD STARTS DROPPING BELOW THE 1120 area on THURSDAY.........the odds will shift that the cycle might need one more push lower. Make no mistake ---- this is a very key 24 hours coming up as regards to the short term. The stock market had GREAT ADVANTAGE TO RALLY TODAY..........BUT IT COULDN'T. This is another market that is at key area and has now been rejected at Dow 10500 a number of times. The trend is still up but it sure looks like it is about to break either way. An announcer on BLOOMBERG tonight BLURTED OUT............I'M TIRED OF TALKING ABOUT THE US DEFICIT. It was an interesting comment.

GOLD MUST HOLD ABOVE THE MOVING AVERAGES (allow 5 dollars for penetration) or face the potential of another short term pullback. Odds favor gold being capped by the red moving average tomorrow near 1144 or the last significant bounce near 1152.

When we take into consideration the Euro and US Dollar development odds favor lower to test support at them moving averages at or just under 1130..........and with 1122 as the Wednesday low, this area will be KEY also on Thursday.

Let's see what happens at the moving averages............

The short term remains BEARISH..... we have a bounce in play, but we are not yet TRENDING. Turning yes..........trending no. (ALL SHORT TERM RELATED TO THE NEXT COUPLE OF DAYS).

Bottom line: It all comes down to whether the pullback now holds our moving averages at the 1125-1130 area and the WEDNESDAY LOW AT 1122. (allow a penetration to 1119).

Odds favor sideways to lower and if initial supports let go, we could see another downside hit in the metals over the next 24 hours. GOLD IS GOING TO TEST SUPPORT ON THURSDAY. Watch that area just below 1130 as guidance.

INITIAL RESISTANCE IS THE 1144-1150 --- if we get above that fine.......otherwise we can't rule out the downside yet.

It comes down to right here......... on the chart below.

No Man's land........between the averages. What way will gold break ?

A break of the moving averages and Failure at 1122 (Wednesday low) would tilt the odds to LOWER to test the lows of this week at 1109 and the 1105 50 day moving average.

The action is the EURO and US Dollar. Should the news escalate in the media about the Euro and the Debt situations....gold could be vulnerable. Barring the bounce we had, the short term trend remains bearish on price breaks listed above and another push down can still develop here. Lets see if the Euro can regain composure. Watch for Copenhagen fallout potential to potentially add bad vibes in global affairs. Finally, watch the stock market..........is it next to start down?

There's a lot on the short term plate. Remain cautious.

==================================

Daily Gold December 15th 2009

COMMENTARY: (daily report follows)

NOTE: The trends above should be noted. The resistance areas listed are usually my high end outlook for the year or the current bull market leg for medium and long term. I will NOTE from now on when trend changes occur in the daily reports. Also, the front page of the website also has good info and serve's as a brief overview and is easier to remember key areas for those who find too much info on the daily page. Check it out more often if you only read the daily update.

It's good to review other buttons too. For instance, click on the medium term button and see what we had to say about the medium term just 5 days before this correction began. My style wants to have a low EXPOSURE near the top of long term CHANNELS like we just reached. AND IT WANTS TO HAVE A LOT OF CASH AT THE BOTTOM OF THEM. I am only human and I don't want to TELL you when to SELL or BUY per se. If I tell you I'm selling some of my stuff it means the same thing. The reason is twofold.........1) I'm not legal to give you investment advice, and 2) I'm human...........and I can and will be wrong at times. NO ONE KNOWS WHAT TOMORROWS PRICE IS FOR SURE. I can only describe the odds. AND I have been very fortunate over the past 6 months in my outlook. When the top came at 1220, those who are on the e-mail alerts (which updates once a day during the COMEX session...........and is a backup if our WEBSITE goes down,.........once in a while sends an alert. In the past 3 months there has only been one or two emails sent that wasn't an intraday update. The last one was sent when gold broke 1200....THE AQUA UPPER channel line. When you get emails from me during off hours USA, its usually a potential trend change short term. What I am trying to say is that I am leaving enough clues to ASSIST you in your gold outlook. IF YOU DON'T HAVE A plan of EXIT AND ENTRY and some type of strategy the chances of messing up increase greatly. Try and give that some thought. For me, I like to have just core holdings at the top of weekly channels and a lot of cash at the bottom of them. Here's a couple of things to remember that are simple.

Medium term:

Did you know that if you use a 45 week moving average as a buy above and sell below research shows you would have avoided the big gold corrections and would have ridden almost the whole ride up ?

Long term:

The Aden Sisters 65 week moving average is very close to my long term average. I can recall only the meltdown of 2008 that went below it........and even then, it was short and at a time when the moving average was still up sloping.

Read the Medium term update, and see if you could tell that I WAS EXPECTING A TOP........AND WHAT THE ODDS IMPLIED. Did I sell all? No. Recall in mid November sometime I posted that I sold 25% of my position and also that I bought silver puts. I have since covered enough to just hedge now.

The bottom line is regardless of who you read, you need to personalize a plan, no matter how simple. Its better than nothing. Nothing is not investing..........its afloat in the ocean with hope the tide gets you to shore. Mine are relatively simple. I am not afraid of unloading 50% of my stuff on the way up. Each time we get further from the NORM --------like 250 dollars above the 200 day moving average, I get rid of some. AS I GET RID OF SOME...........I try not to be in a hurry to re buy. Why ? Ask yourself how often your correct when you buy in a hurry and force it ? I know I'm not.

For anyone else but futures.........THERE ARE ABOUT 4-5 GOOD TRADES PER YEAR. That's it. The rest of the time is managing and patience. THAT IS ALL THERE IS. If you try and add more.......you will lose money.

Since July, I've published three buys. The first was near 915 in July...... I think I rode it to 950ish and indicated when I sold. The second was in September at 955 and 964........I think I rode it to the 990 area...I think I indicated when I sold....and the third was at the 1010 area when the breakout seemed imminent. That one I stayed with to the 1200 area.........but indicated a 25% sale on the way up. If I recall it was at the 1140 area, but don't hold me on that one.

That's three in six months............ABOUT AVERAGE what it should be. Many times I will not say anything because........I am not doing anything.

One of the things I am reluctant to do is that now that we have ENTERED into a potentially EXPLOSIVE uptrend, I am reluctant to tell you what to do because I don't want to be the cause of you missing out. What do I mean by that? IF you've sold your position because of some channel line and you wake up and the BANKING SYSTEM IS SHUT DOWN........AND GOLD IS UP $200 dollars an ounce, and it was me that told you to sell...............well.....that just won't fly.

However, there are enough clues along the way to let you know when its time to be HEAVILY LONG and when to lighten up. But are you willing to do it is the question?

There are core holdings, then medium term, then short term. Do I sell core holdings? WHEN THEY DOUBLE AND TRIPLE ------- YES. I sold 33% of International towers recently. Why? Because it went from $1 to 7 dollars. ( I got on at $2.66) I am willing to CHANCE HAVING LESS and having some of my cash back. If it continues to RALLY great. I have no regrets. If it pulls back lower, I will add some again. That is how I treat my stocks.

Lets discuss gold. If I was just starting to accumulate, I'd have a buy at 1100, 1000, 900. But I would not put a 100% position on after a 500 dollar rally in 13 months. I'd also have a buy at 1300 because if it don't go lower.........then I will have to add higher. Fine. At least I'll be adding during a major uptrend.

What's the plan in a nutshell?

Patience.........Discipline.........money management risk............and an ENTRY AND EXIT PLAN. You know, all the things that we want to put off. (LOL). Plans don't have to be complex either.

For those who got left behind at 1000 -------- the simple reason is you did not have an UNCLE position.......a point where you would buy. THAT ALL TIME NEW HIGH AREA AT 1033.........do you know want the PULLBACK LOW WAS ? 1026.......then it was straight up for 200 dollars. We all need an entry point and an exit point.

Finally IN A BULL LEG ---------IT IS VERY DIFFICULT TO RE-ENTER IF YOU MADE A MISTAKE AND DID NOT GET OUT AT THE TOP..........but got out and the market kept going higher. That is why if your selling on the way up.........sell little bits at a time..............by time the real top comes, you'll only be 50% long.

IF WE BEGIN TO EXCEED the previous highs ONE can argue to NOT TRADE. JUST STAY WITH IT. During the Oct/Nov rally..................this UPDATE STAYED with it.........stayed bullish as long as possible and it paid off.

Think about your entry and exit plan. I will have much more to say about it in another update.

Daily Gold December 15th 9:15 pm

Last night we highlighted the tiny purple moving average, and said we needed to at least move above that to get any inkling that the short term is bouncing. A look at the chart below shows the exact high of Tuesday was the tiny purple moving average at 1130. Look how we've hit it twice in the past 24 hours but have yet to exceed it. Look at during the rally of November how whenever we hit it or just below it, it was a short term low and higher prices ensued. It was a high "velocity" move thus only the tiny blue, purple and fast fat yellow averages were ever hit. When did the trend end ? When the tiny blue, purple, and the Aqua upper line and the fast fat yellow ALL LET GO IN TWO DAYS. (That's a short term trend change). Some last a while, some fizzle out. The trick is to ride the ones that last, and quickly get rid of the ones that fail. That's what the short term is all about.

From a support area, we cited 1109-1115 as initial and the low was 1112.

What next ? We are right there again for the third time at the tiny purple and blue moving averages. Look how tiny purple is now next to tiny blue and price is right there. This is suggestive that the short term trend is nearing an end. Not to say we can't fail here, but an attempt at the area I've circled in RED is fast approaching a potential TEST in price. Thus if we move above the tiny averages, the red oval area is the first bounce target.

Resistance ; 1128-1130 and the RED OVAL DRAWN ABOVE: 1133-1144 and 1155-1175. This area covers all moving averages, the aqua lower line and the bounce high of 1170. Its key resistance this week.

Support ; 1109-1112 -- 1080-1105 and then 980-1033

You can see the key support areas highlighted. There's a short term cycle low due this week suggesting a bounce to the Oval area. What we aren't sure of is if the low is in short term before the bounce. IT looks it.........but it almost seems too easy again. The 50 day moving average is at the top part of our first support block near the 1105 area. This area is also where the Nov 4th high and the Nov 8th and 12th low resides......making 1105 an interesting area. SHOULD WE NOT HIT IT AND START RALLYING ABOVE THE AQUA LINE IT WILL BE A SIGN OF STRENGTH. At this point we would submit that the odds are still even as to direction in the next 24 hours. It can go either way..... and we expect the trend to resume once the fed meeting is over.

As you know I'm very price oriented..........but TIME CYCLES on the short term FAVOR A BOUNCE TO BEGIN UP SHORTLY..........circa between now and Thursday. In that manner, odds favor a bounce to begin. We're just not sure if there is one probe lower yet to 1105.

WE MUST EXCEED tiny blue and tiny purple moving average at the 1128-1133 area. Right after is Fast yellow. After three hits in short order, odds favor tiny purple should give way to the upside. But then the battle is the rest of the resistance. Since we've seen no upside in the past week, there is nothing to go on as to how the BOUNCE will look in pattern or strength. With end of year upon us, that puts even more of a spin on things. When all is taken into consideration, the potential to bounce, sell-off or do nothing here for the next 24 hours all have merit.

The FED meeting that is going on is a potential reason gold is waiting for it to finish up. Whatever comes out of there will be ALL TALK AND NO ACTION. They will say they are going to stop the presses if you will, but doing so would be the end of their system of things. It's a no brainier.

While I have discussed certain tactics in my commentary above, the bottom line is that the world order is in SERIOUS DISREPAIR and IS STILL HEADING FOR A WATERFALL EVENT. I am not smart enough to know for sure if it will DEFLATE or INFLATE. I've heard both sides. Sometimes I laugh at the deflationists but I go back to thinking how EVERYONE is going to be correct and we will have inflation. So I have narrowed it down to one thing; CREDIT CONTRACTION. So far, gold has sold off on each. The peak price of 2007 was the day Lehman went under..........and the recent Dubai situation has also produced a peak. Therefore I am watchful.

One thing we know..........IF ITS INFLATION, then this is just a pause. If its deflation, then yes, GOLD CAN FALL WITH ALL OTHER ASSETS......BUT IT IS STILL GOING TO BE THE ONE THAT RISES FROM THE ASHES AND SETS A NEW COURSE.

We have some very interesting dynamics going on. Jim Willie's latest internet update really lays it all down when one considers the worse case scenario. It was posted today at goldseek website and its worth a read to gain perspective. Essentially, he lays out the case that even the FEDS ARE PROBABLY INSOLVENT AT THIS POINT. He also points out how not to MISINTERPRET THE CURRENT DOLLAR RALLY AS STRENGTH. In fact, he points out that the EURO AND STERLING as so weak as they are in MORE TROUBLE THAN THE USA.........that it makes it look like the dollar is rallying. Now, the dollar is rallying but the point he makes is this.

CHINA, INDIA, RUSSIA, CENTRAL BANKS .............ARE ALL BUYING GOLD NOT DOLLARS. They dollar is not the safe HAVEN.........only the least weakest since the DUBAI story. If gold turns and begins to rally, that will confirm it.

The bottom line is that the long term OR even the MEDIUM TERM IS GOING TO COME TO A HEAD. There is a great financial turmoil that has not played out. As I stated last week, we've gone from personal insolvency, the corporate insolvency, and NOW WE ARE AT NATIONAL INSOLVENCY.

THE EU and UK .........and the USA are in very deep weeds. Countries like Brazil, Russia, and China are leading the way now. The are the BRIC ------- and we are the BRACK.

Now, if personal, corporate, banking, FDIC, and the government and the FED ARE ALL INSOLVENT what do you think is about to happen ? And that is the CRUX............does everything melt up or melt down? What is happening to housing is a liquidation. That is why the price is down so much. IF THE ECONOMY does not pick up and another default hits the system.........we will see public, corporate, and national liquidation in one shot. IN THAT SCENARIO......everything drops. Gold........however, is the one that rises from the ashes.

How can the FED BE INSOLVENT?? Who do you think has all the toxic mortgage's ? The FED. As Willie brilliantly points out........THEY HAVE GONE from LENDER OF LAST RESORT TO "BUYER" OF LAST RESORT. In plain speak, they took all the debt. Now they face collapse if that paper is no good.

One way or another one hell of a move is going to transpire in the markets of 2010. While we have our opinions, we sill follow price where it takes us.

BOTTOM LINE: A short term bottom is due near this timeframe, ideally in the next 48 hours. One more punch lower to the 50 day and a touch of first support would also be ideal for a low. On the inverse, SILVER IS SHOWING SIGNS THAT THE BOUNCE IS ABOUT TO DEVELOP FIRST. Its a toss up.

Our best bet is to wait for a turn if we are not trading futures. Lets see if gold can finally bounce or if it will wait for the fed meeting to end. A little bounce here, with a spike low after the meeting and a reversal higher into Friday might be the way the BOYZ let it play out.

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Daily Gold December 14 2009 10:30 PM EST USA

Mondays outlook was right on when we called for a range bound day. Our first level resistance proved to be the highs and the range was narrow for a change.

There is not much else that has changed. Our excerpt from our front page pretty much tells it.

Tuesday's Outlook....................

For Tuesday, we still need to break above initial resistance at the 1128-1135 area to get something going in gold. We range traded 1115-1128 on Monday.............and we are not trading on the upper end of that range.

Resistance initial is 1130-1132 and 1142-1147.

The key resistance area to watch for the week is the 1140-1170 area where the Red, yellow and green moving averages reside as well as the AQUA CHANNEL LINE circa 1150's.

For the bounce to continue we need to get above the 1140 area soon.

Support is the 1070-1105 area...........but there is initial support now at the 1109-1115 area again. Any pullback that holds above 1115 tomorrow should provide impetus for a bounce towards 1140-1170.

The 50 day moving average is down near the 1105 area. We got within 4 dollar last Friday. Was that enough for a reaction back up ? It would be a nice draw in.

I think it can go either way on Tuesday and we watch the moving averages.

The 60 min chart of Feb gold shows it. 1130 is tiny purple moving average....and the major break we need to neutralize the downtrend is the red and yellow moving average and the aqua channel line. That puts key resistance at 1140-1155 and then we have the green moving average at 1165. When we couple last weeks highs with all of that we get the 1150-1170 area as key resistance for this week.

Bottom line: MUST GET ABOVE AQUA LINE OR WE COULD FACE A TEST OF THE LOWER WHITE AND OR GOLD LINES. The 50 day is at the 1105 area. A failure at tiny purple or under that aqua line keeps the short term trend DOWN.

REMAIN CAUTIOUS AND DEFENSIVE. Odds still favor lower once the bounce is complete.

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Daily Gold December 14 2009 8:55 AM EST USA

The gold market enters this week with a lofty drop of about 100 plus dollars. We can see where gold tried to get back above the aqua trend line last Friday morning but was unable to. We have now lowered the WHITE HORIZONTAL line to the next support area. We can see that the gold horizontal line and the white horizontal line shows support for Monday is the 1070-1105 area. Unless we are in a panic down the gold market should get an initial bounce here. We rallied a bit last night and but we were only able to reach the tiny blue moving average. We can see that a the moving averages are now all moving to provide resistance at the 1130-1152 area where the tiny blue and purple as well as the red and yellow moving average have all gathered just below the aqua uptrend channel. The only other moving average is the green average at the 1161 area.

Resistance 1130-1152 and 1161-1176

SUPPORT 1070-1105

The Dubai situation got a little relief this morning as there has been some commitments to keep them from defaulting this month. The DEBT and DELEVERAGE situation is key to going forward. If it can die down, a bounce in gold should develop. Interesting is that the stock market HAS NOT BUCKLED on a dollar rally. So we have seen an initial decouple where gold and stocks did not follow each other last week. This also bears watching. Finally the US Dollar.

In the currencies, it looks like a bullish rally pattern is in play. However, the dollar is at an area where a pullback to test key areas from last week should be in play. IF THIS PULLBACK in the USD fails and moves below the 75 area, odds will favor that this has only been a bounce. Its too early to tell just yet what the outcome is.

Barring bounces in gold, the short term is still technically in a short term downtrend. Odds favor a range bound market over the next few days. If we can hold the lows of last Friday, resistance will be the 1128-1155 area over the next few days. Support will be the 1070-1103 area. Within that support band the 1090-1105 area seems to be one in its own also.

For now, overhead resistance (as you can see by the chart) is heavy in the 1128-1155 area. Odds favor price to trade under the aqua channel line and above the White horizontal line. Should the white horizontal area break, then the gold line will become next support.

Until we start moving above some of our moving averages, the short term trend remains in bearish mode.

Lets see what gold does today. If it can hold the current area over the next 24 hours the chances of a bounce towards 1150-1180 should develop. Tonight we will take a look at the weekly and monthly charts in gold to see how they look.

In summary, a short term low AND BOUNCE IS DUE THIS WEEK. We'll also be looking at the short term cycles to see if we can get a bead on the outlook over the next few days.

Bottom line: Odds favor a range bound day and at some point this week, a bounce. The bounce could be sharp and fast. We are not sure if the bounce begins from here or if we are going to touch the 50 day average first. Watch the moving averages. We must move above the tiny blue and purple averages and then CHALLENGE THE RED AND YELLOW MOVING AVERAGES at the Aqua channel line. THAT is the key area this week.

If we can get above 1128-1135, odds will favor a test of the RED and YELLOW moving averages and the aqua channel line at 1141-1155.

We'll have a lot more to say on tonight's update.

May you prosper this week.

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Daily Gold December 10 2009 10:50 pm EST USA

In last nights update, we were not sure if a turnaround bounce would be the odds favorite for Thursday, and as it turned out, Thursday continued to vacillate near the aqua trend line. Our closing line was to watch the 1115-1125 area, and the low was right in the middle, at 1121. Our stance was that we needed to move above the 1133-1139 area to confirm a bounce. The exact high over the past 24 hours has been 1139, and that just came in the opening Friday morning session. As you can see by the pattern, gold is still hesitating here at our KEY short term ZONE. We know its key by the price action surrounding the main components, the aqua channel line, the red moving average, and the White horizontal November price shelf line. Notice that the tiny blue moving average has now joined the fray and the tiny purple average is just arriving there as well. We now have 5 KEY COMPONENTS THAT IS ABOUT TO PROVIDE SUPPORT FOR GOLD TO BOUNCE UP, OR Resistance from which gold will make its next move down towards the 50 day moving average just below the 1100 area. The other two moving averages have converged at the 1165-1168 area where secondary resistance now lies. I am always fascinated how price, channel lines and moving averages all converge when a key turn point shows up on the charts. This area that gold is defending has been the lower band of momentum that gold has relied on as support in July and August. Its an important point to try and maintain. However, a failure here does not make gold a bear market, but simply that it is a medium term correction. Both the medium and long term uptrend in gold is intact and fine.