GOLD Daily Chart Sideways Symmetrical Triangle

We have watched this triangle pattern unfold for a the last few months.  Many times, price will break thru sideways triangles about two-thirds of the way thru (blue circle) and these breakout are typically fake-outs, which was the case for gold in February.  Price then returned back down into the triangle and fell out the bottom which would be expected.  (Conversely, if price fails out the downside about two-thirds of the way across, this would be a fake-out with price then moving upwards and breaking out the upside). Price has now dropped under the 20, 50 and 65-week MA's, all bearish.  The 65-week is a key long term target where price always needs to come back to check. For a couple years gold stayed far away from the 65-week but now it has returned. Typically an overshoot occurs, look at how price was above the 65-week MA. Expect the same on the downside.  The 20-week MA has crossed under the 50-week MA which is very bearish.

The news does not improve.  Note how the indicators are weak and bleak (red lines) printing lower lows.  The MACD histogram is positively sloped (green line) but is not positively diverged since price has to make a lower low first as compared to December's low.  The black lines show critical support levels at 1560, 1475, 1425, 1325, and 1200. Interestingly, if you project the vertical side of the triangle (450 points), 1650-450 = 1200 target. Since price failed out the apex of the triangle this lower target may be muted somewhat but the 1325 would definitely remain in play. The selling volume is somewhat muted since many gold holders are long term believers. Therefore the selling may take the shape of a steady eddy downward move.

The projection is for continued lower prices for gold moving forward. Watch 1560 like a hawk in the days ahead since failure at this level would ensure further downside. When/if price violates 1560, that provides a lower low than December, so check to see if the MACD histogram is positively diverged, if so, gold would at least receive a short bounce at that time, but that would likely simply be an opportunity to sell. The bright side is that Chairman Bernanke will likely announce QE3 when the CRB is in the 250-280 range, so at that time the dollar will plummet and gold will sky rocket. Thus, weakness is ahead but QE3 will be a savior for gold, whenever it occurs.  This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.