Gold Downtrend Forecast Update

by Nadeem Walayat, TheMarketOracle.co.uk | April 3, 2008

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This is an update to the gold price forecast posted on the 20th of March which illustrated a downtrend target for gold of $850. Subsequent price action now enables me to refine the forecast trend as illustrated by the below graph. 

Gold has reached a short-term oversold state on hitting $875 which has led to a corrective rally back through $900. This rally is corrective and is unlikely to carry much higher in terms of price. The target for the current rally is at 50% of the current impulse decline i.e. $917, at most gold could extend the rally to $920, however the risks are for a sharp continuation of the downtrend towards the refined target range for gold of between $835 and $800. Therefore the current rally presents a low risk shorting opportunity to add to shorts or initiate new shorts with a tight stop over the target max high $920, with stop movement on a decline back through $900 which would imply a resumption of the downtrend. However positions should always be initiated on short-term triggers, the immediate trigger for which is $890, which is expected to rise on today's price action towards $896. 

The only caution which signals short-term volatility is the oversold MACD state which requires gold to hang around $900 for a few days to reduce this oversold state. However powerful impulse moves are more than capable of moving an oversold market to a much more oversold state. 

Copyright © 2008 Nadeem Walayat
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