The difference a day makes.... Gold back down to the 100 day MA.

Technical Analysis

Author: Greg Michalowski | gold

Last Friday up $15. Today, down -$15.

On Friday, my headline read "Gold up about $15 on the day. Highest level since October 17th".  I also sub-titled the post with "Tests 38.2% of the move down from September high"  

You can't ignore the move. The price moved away from the 100 day MA which had been a magnet for traders.  However, I did warn by saying:

"Although sharply higher today, we did stall against the 38.2% retracement of the move down from the September high at $1297.70. The high today reached $1297.25.  If we are to really get the bullish ball rolling from here, a move above that 38.2% retracement level will be eyed as the next key target to get to and through.".  

Guess what?  We could not get "to and through" the 38.2% retracement.


Looking at the daily chart above, today the price peaked below the 38.2% retracement level.   The move higher in the dollar today has helped to push the precious metal all the way back down to the 100 day MA.  

Since October 23rd, there still only remains 2 trading days where the price has not traded above and below the 100 day MA.  Going back to and below the 100 day MA line at 1280.18 is certainly not a good thing for bulls.  If fact it is more bearish. 

So back to where it all started and looking more bearish again - especially after failing on the break higher on Friday.  

Remember....traders are quick to turn around the bias of a market that fails on a break after non-trending for a while (i.e. "if you can't go higher on a non trending break, it must go lower"). 

A key target on the downside remains the 200 day MA at 1265.02. That MA has not been broken since July, and dips over the last month or so have also stayed away from the line (green line in the chart below).  

However, I would expect that the buyers from Friday are sellers today, and the failure from Friday on the break, will lead to the sellers becoming a bit more determined to push the lower extremes. So look for the downside to be explored a little more in the near term and the good chance to see then explore what life is like below that MA level at some time soon.  After all, the buyers certainly could not hold the gains for too long. So why not explore the opposite extremes.