The August Gold is leaving little “technical” gaps all over the place. Classical technical analysis suggests that gaps on a chart will be filled. (It doesn’t specify when though.) I will not worry about the gap on the downside being filled and instead, focus on the upside.
Should the Gold attempt another high, I will tentatively focus on the 1267.0 area to initiate a short position with an initial profit objective of perhaps the 1257.3 area. If the Gold moves up rather soon, I could imagine a $20 – $30 fall from its highs, similar to the one from 1254.5 down to 1223.1.
That’s why it’s so hard to buy a dip or stay on a trend- the corrections can be pretty deep.
I prefer to sell to someone who wants to buy at semi-outrageous new highs and ride his ‘slap on the wrist’ down a little ways. I’m more comfortable when I’m on the other side of someone’s trade when I believe they are most likely doing the wrong thing. (In this case, chasing the market).
Long term Trading is a whole ‘nother ball game.
The 60 minute bar chart below is making an ‘upside down’ bear arm formation (thought you’d heard ‘em all, huh?). Translation: The formation is bullish.
Bear Arms can produce big moves from where the shoulder turns. In this case, since it’s an upside down Bear Arm, we could see a move (perhaps rapid) well beyond the recent highs of 1254.5
Call with questions……Silver analysis to follow.
Sean E. Blair
Adler 747, Inc.
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