Gold Daily Chart 'Golden Cross' Sideways Channel

The thick red lines show the large descending triangle that was in play for many months. Price came down and actually failed at the base line at 1575, but then recovered as rumors of quantitative easing filled traders heads like visions of sugar plums fill children's heads the eve before Christmas. Draghi's comments about supporting the euro by all means necessary launched the gold price up and out of the multi-month descending triangle.  Then the actual ECB bond-buying and the Fed's QE3 announcements sent gold vertically. Note the red downward sloping trend line in place going into May. The lower price was met with positive divergence for the MACD and stochastics, which helped to bounce price, but the RSI and money flow want to see a retest of the 1525-1550 area in the future.

The blue lines show a long term sideways channel in place between 1550 and 1800. Price is now moving towards the top rail of this channel at 1800.  The short red lines for the indicators show negative divergence in place but the long and strong money flow will want to see another matching or higher high in price after a pull back.  The overbot conditions, and further developing negative divergence, and price testing the top end of the channel range, all hint at a pull back developing.

The Golden Cross will likely occur today. This is where the 50-day MA moves up thru the 200-day MA (yellow square). This is a bullish signal but view this development as more of an intermediate and longer term signal rather than a shorter term signal. Budding technicians will run around the room waving the chart exclaiming "Golden cross, golden cross!" but do not fall victim to this thinking. Seasoned technicians know that the golden crosses are nothing to become too excited about, just as the death crosses are.  Note that the Death Cross (50-day MA stabbing down thru the 20-day MA), occurred in April. This is a bearish signal but gold actually bottomed a month later and reversed direction. Thus, take the Golden Cross with a grain of salt, it is a bullish indication but think of it in terms of pointing the way forward for months ahead, not days or a few weeks. The golden cross could quickly reverse into a death cross again next month.

The neon green ascending triangle developed this summer and that targeted 1725 once the 1625 break out occurred.  The projection is for gold to top and roll over now as price teases the top of the channel. A test of the 1525-1550 area is likely on tap for the weeks and months ahead. 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.