GOLD Weekly Chart Descending and Sideways Symmetrical Triangles

We looked at gold a couple weeks ago at the 1530-1550 area and were looking for a recovery move to tag the top rail of the descending black triangle. We're there. If long gold, it is time to do some soul searching since this may provide the last opportunity to exit for an extended period of time. If price breaks the triangle base at 1560-ish, the target is 1210.  The pink sideways symmetrical triangle provides no bettern news. Price punched out of this triangle (pink circle) about two-thirds of the way thru the triangle which is a text book fakeout move. Price then collapsed out the bottom and is meandering sideways for now.

The indicators (red lines) are weak and bleak expecting to see lower numbers moving forward. The histogram is sloping up but it is not positive divergence since the price move over the last half year is more flat in nature and did not really place a substantially lower low to set up a divergence. The 20 MA is under the 50 MA whch is very bearish. The projection is for a failure of the descending triangle to occur at 1560 ushering in extended downside.  If long gold, many options are available such as buying puts, using inverse ETF's and other techniques to hedge the long position (if you do not want to sell). Another option is to simply lighten up on gold. Of course, anything can happen and quantitative easing is a wild card.

The odd thing is that this dire ominous chart does not agree with the coming QE action.  Look at the move from August 2010 when Q2 occurred; big move higher.  All things known are always priced into charts so traders fully realize QE is on the table. Why then, such a trouble chart?  Perhaps long term holders of gold are quietly sneaking out the back door reducing their holdings and an increase in supply may be projected from the way this char is set up?  The other aspect is that the coming global intervention will be the fourth major stimulus move (QE1; QE2; Operation Twist/LTRO1 and 2; and now the fourth with QE3 and LTRO3 and China stimulus) and everyone realizes it is all a joke.  Markets no longer react to company fundamentals, markets are simply a casino waiting for more Fed stimulus so the crack party can crank up again, then after the rally pop occurs, you short into the top.  Perhaps there will be a different affect in gold for this fourth time of bringing out the stimulus punch bowl?

Watch 1550-1560, treat it as a cliff edge, up to then some pebbles and rocks are simply rolling down the side of the hill, if this level fails, gold falls over the edge. Lower target area is 1170-1260.  If the 1550-1560 descending triangle base line holds, the cliff edge, gold should be able to hang on. 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.