Commodities | Jan 17 2011
By Rudi Filapek-Vandyck
On Friday, the TechWizard reported that gold has formed a bearish looking head and shoulders pattern on price charts over the last 3 months of trading. The techwizard added that for the first time since July 2010, the precious metal (non-fiat currency) has generated bearish read bars on his proprietary trading system. To make matters worse, momentum strength in the MACD has vanished which is yet another notch in the bear camps book, the Wizard adds.
A break and weekly close below the support trend line will cause long term trailing stops to be triggered and a fall to US$1300 is thus not out of the question, reports the Wizard. On his analysis, only a new high back above US$1430/oz would negate this outcome.
Technical market analysts at Barclays, however, do not share the Wizard's bearish view and report they continue to be bullish on gold. The analysts report they "look for support to build in the [US$]1350/1340, where the 100-day average meets a Fibonacci retracement. Breaking over nearby resistance in the [US$]1400 area would confirm our view, opening the [US$]1432 high and our initial target zone in the [US$]1460/1480 area (1.382 Fibonacci projection/rising trendline resistance)."
For silver, the Barclays analysts expect buying interest in the [US$]28.00 area and a break above nearby resistance in the [US$]30.00 area to open the [US$]31.26 high and their initial upside target at [US$]33.20. The latter is a 1.382 Fibonacci projected target, the analysts explain.
The TechWizard is the pseudonym of Scott Morrison, whose experience in financial markets exceeds twenty years. Morrison operates his own website nowadays at www.techwizard.com.au. All views expressed are the TechWizard's, not FNArena's (see our disclaimer).