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OCT 31, 2011
GOLD AND THE MEDIUM TO LONG TERM TREND
If you're wondering why gold has been in a wild choppy range the long term charts offer a clue. There is a new channel that is being formed that has a higher slope, momentum, and velocity. The big daily price ranges in gold are the result of the new "Panic Channel" that has been formed. This new channel is the guide as to whether the "loss of confidence" gets worse along with the global conditions we are dealing with.
I've circled the chart in red where the lower dotted panic line and the upper gold main channel lines are intersecting. NOTE how the wild price swing is right in between the major lines. In other words --- this is where the "battle" line for the long term bull market resides at the moment.
If you think it through --- there is only two directions gold can take from here. Above the upper main channel line and into the panic channel ------ or a break below the lower blue dotted panic trend line. THERE IS NO OTHER CHOICE. Thus it would stand to reason that above the GOLD main channel line and the trend IS UP. A break below the lower dotted blue channel line --- and the medium term trend will be down. In between is neutral territory. The roadmap for the next 6 to 12 months lines within these channel lines and will be our guide to whether the trend is up or down.
Since we have no control of price ---- then the key is to follow it where it wants to go. These two long term trend lines will give us trend direction and potential velocity. While we all have an opinion of where price is going --- it is the market and the market alone that dictates WHERE it does end up going. The next best thing we can do then -- is figure out where the turning points are. This is one of them. Join us as we track the 21st Century Bull Market. Gold - A weekly close below 1643 would be bearish, a weekly close at or above 1680 would be bullish. Some lateral resistance at 1655 to 1665. A move above 1702 would allow PoG to move up to 1770ish or better. 1595 appears to be set up as critical support in the short term, a break of which invites a move down to test 1440 to 1510
This weeks big move wasa result of silver finally moving above the lower uptrend line. For four weeks price has been stuck between the the long term blue line and this uptrend line. THE long term blue line is the MOST IMPORTANT Line in the entire silver market for this reason ------ all of the old highs were where this line would "HOLD" price as resistance. Look at the 2006 and 2008 highs on the chart below. Now look at where the explosion higher was ----- right at this long term blue line. And now the CORRECTION into this major long term line has held the line on a MONTHLY CLOSING BASIS as October is going to not only close above the long term blue line --- but now most likely in the uptrend channel again. There is only really one more hurdle that silver must over come and that is for our LONG TERM TRENDS. Look how price is arriving at the major moving averages. This line provided support throughout the entire run from the 20 dollar area. Now price is arriving once again at these lines. There are two things to watch for. First, the BLUE line must be above the RED line for the trend to be up. Second --- price must have weekly closes (at least two of them in a row) to favor the uptrend has resumed. These moving averages are where the next major RESISTANCE AND PRICE TEST FOR SILVER IS. As far as pullbacks --- the lower white channel lin line near the 33 area should be strong support for the coming week. Key MT support still at 28.41. There is a bullish CnH formation present that could propel PoS to a calculated target of 37.55 if the rim line is breached at 32.70 this week. This bullish pattern will die if 28.41 is broken first and possibly produce a fall into the $25 range
ST support range is 32.92-33.57 and look for resistance in silver at the 36.50-37.55 area
Options Expiration Calendar for Gold & Silver 2011 ==== All set until November 26th
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