Gold has hit its lowest closing level (but not yet its intra-day level) in almost two months. The intermediate term momentum indicator is at its lowest level since early August. The price action seems to be developing a weaker and weaker strength, not usually a good sign.
GOLD
LONG TERM
I mentioned the intermediate term momentum weakness in the introduction. Even the long term momentum is showing greater weakness than the price action. The indicator is well below recent levels while the price is still holding its own, but weakening. The long term weekly price/momentum chart shows the two year old up trending channel in the price action and the support line in the momentum. The momentum support appears ready to be breached but the price action is still some distance from its channel support line. The weakening momentum may be more of a sign of intermediate term reversal than a long term reversal. There is still a long way to go for the momentum to get into its negative zone (below 50%). The one thing that this action DOES suggest is that one should hold off on new purchases until things get a little stronger or if one just must buy then one should understand that one is doing so at a time of much greater risk of reversals. Since the indicators are not yet bearish one would not be on the sell or short sell side as far as long term commitments are concerned. Most likely what lies ahead may be a very good new buying opportunity but not yet. The daily and weekly action should tell us when it’s ready to start new purchases again. (more)
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