Spot Gold has shed about $68 over the last two days as the FOMC Minutes suggested that QE3 was more off the table versus on the table. This has led to the “speculative money” exiting. The failure on Tuesday and Wednesday to move above the 100 day MA was also a contributing factor to the subsequent bearish move (see chart below).
Now,
- Channel trendline support (see chart below) comes in at the $1606 level
- There is bottom trendline off of support (from July 2010) which comes in at the $1589 area.
- A break of these support levels should solicit additional momentum selling.
- Nevertheless, I would not be totally surprised to see some profit taking buyers on the first test(s). Gold has been a tough nut to crack to the downside. However, some of the mojo has been sapped out of the market with the price below the 100 and 200 day MA levels.
Looking at the 5 minute chart, the move down since yesterday has tracked the 100 bar MA. That moving average is still trending lower – keeping the sellers in charge. Traders can use this MA as a trailing stop on shorts. A move above it, would suggest, the trend has transitioned to a non trend/correction mode. The current level for that MA comes in at $1623 and moving lower.
