Monthly time frame:
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Gold has been in a bear market since 2011.
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A potential Ending Diagonal, which is found at the termination point of a large pattern, could establish a major bottom
The Ending Diagonal is a compelling reason to expect at least a large retracement of the decline from the 2011 top
- Gold is now attempting to breach a trend line resistance from the 2012 lower high
- A strong end of month could complete a Morning Star reversal pattern
- The next resistance is located at the 10 mma = 1126
- Above the 10 mma we have resistance 1 at 1192 and resistance 2 at 1308
- The origin of the Ending Diagonal is located at 1390 which coincides with the 0.382 retracement of the decline from the 2011 top
Weekly time frame:
- In addition the decline from the September 2011 top can be counted as corrective (Double Zig Zag)
- In order to confirm the Ending Diagonal Gold has to breach the upper converging trend line, which coincides with the 50 w ma = 1153
- If the 50 wma is breached and it becomes a support then odds should favor a large rebound and maybe even a major bottom
Daily time frame:
- Last week Gold reclaimed the 50 dma and broke the resistance at 1090.
- Friday's Inside Day is suggesting a potential short-term pause
- If the 50 dma holds the next move up should aim at the 200 dma = 1140
- It will be interesting to see how gold reacts to a potential oversold rebound of the stock market
- A pullback should be viewed as a buying opportunity
