Wednesday, May 30, 2012
By Scott Pluschau
Today there was a big rally off support which is both Bullish and Bearish. How is "both" possible? Well it shows that there is still strong demand down here and potential "Accumulation". The downside is that each time support gets tested it is weakened. How does support get weakened and not strengthened when it has been tested numerous times? Because the demand or buying power gets depleted/frustrated or even worse has a bigger position to unload when support fails. Stops may be getting clustered down beneath the 52 week lows which becomes a magnet in any market.
I don't think there is any way to know if we get a breakout or a breakdown from the balance area. Prediction is useless. It doesn't matter to me what any "indicator" or "guru" says. What I want to do is capitalize on what the market does afterward.
Today's price action going into the overnight resembles a "Bull Flag", and the bullish follow through "Measured Rule" will put it at the extremes of the balance area.
With that being said, the situation in gold for the bulls is quite a dangerous one. The path of least resistance is lower on a breakdown.
I know exactly what I am looking for, where I have to react, and how to do it.
Let's see what happens...
(Click on chart to expand)
I am very focused on trading these days, and until there is an additional service that is up and running, the commentary from me may continue to be on the light side.
My most previous post on the developments in the daily time frame of gold can be found here: http://scottpluschau.blogspot.com/2012/05/gold-on-verge-of-new-phase-of.html
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