Thursday, September 15, 2011

Gold –Possible Top out on Long Term Charts

If we look into the long term charts of gold on log scale. 

We have tested the top of the long term channel at 1900-1950.

Every time Gold has touched the higher end of the channel it has ended up correcting 15-20% also over the next few months.
  
If one has to enter I believe a technical entry point comes around 1600-1700 dollars. 

For the traders i would suggest to be careful on short term longs. Below 1770 there could be much sharper correction in gold. One may even look for a short at 1880-1920 zone.

Lets have a look at the daily charts which shows 1770 is an important level.

Although there would be many arguments of Gold being a good hedge to inflation or a great long term story but at current levels one may pause a bit on Gold Buying and if you have not bought gold yet its better not to take exposure to it.

This is purely from a market perspective and from current levels I would at least expect the pace of gold rise will slow down and downside risks seems more higher.

Credit:  Nooresh


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