On yesterday’s posting on Gold on Possible Weakness, we are anticipating that Gold will be falling and also predicted the possible price levels of the move.

Here is the outcome of our prediction!

Gold on 4 hourly chart on 10 June 2010

As mentioned on previous posting, Gold may find support on “a resistance turn support level near the weekly breakout” and true enough, that is how Bulls are maintaining their fort for the past 16hrs (4 bars seen on the 4 hourly chart above).

Notice that Gold did a breakout of the Equidistant channel attempt and failed to break above May’s High on Week 19. Thus, it just confirms that May’s High is a strong resistance.

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Gold has surged up yesterday from a low of 1210.77 to 1244.75 and it is resisted by top of 4 hourly equidistant channel shown below.

4 hourly chart of Gold

Short Term Bears may want to short near the top of the channel, since it is near to a resistance zone but Gold may find support at

(1) a resistance turn support level near the weekly breakout,

(2) uptrend line (blue) and

(3) bottom of the equidistant channel.

4 Hourly chart of Gold seems to suggest a pending Head and Shoulders chart pattern, which could hint towards a bearish reversal.

4 Hourly Chart of Gold

We are currently near on the high of the Right Shoulder, should it complete its formation, this could mean that Gold could fall beyond 1100 level.

The current Price level is also near to Week 18 high, which could be a resistance level. The resistance zone is emphasized by a confluence of an equidistant channel with the horizontal resistance level.

However, the bearish view will be invalidated if Price attempts to break beyond the high of the Head formation.

Daily Chart of Gold shows a Head and Shoulders Formation.

This forms a lower high, which adds to the bearish view of Gold.

Daily Chart of Gold

If Price has confirmed the Head and Shoulders, the next level of Support will be this year’s low.

However, as the neckline could be a support then, Gold may attempt to break above the Head and Shoulders for a next high.

Gold has risen to a high of 1220 and fell near 1080. The recent moves on the daily chart has attempted to make higher lows, forming a possible up trend move. Will the bull be strong enough to push it for new highs?

Gold Daily Chart

As from the daily Gold chart above, it seems that there is a current deep retracement and the current low being a higher low hints to a possible up trend continuation.

But the perspective at the lower time frame suggest a different view.

4 Hourly Chart of Gold

The downward channel reveal that the current spot price of Gold is near to the top of the channel. This could be a strong resistance level which Gold must have a definite break up to confirm a bullish move.

Lastly, it could be that the downward channel is strong, providing a resistance level whereby Bears will be eyeing to short it further.

Gold is currently near the Support Zone and formed a lower high away from the recent high at 1226.

The current support zone near 1070 seems strong as it was formerly a resistance then turn into support.

If the Bulls were to continue their rally, then they will have to breakout of the resistance at the lower high (1160) before overcoming the Yearly Resistance of 1226.

In the same way, if the Bears were to overcome the Bulls, then they will break down  every support zone (currently between 1074 and 1025) till both Bulls and Bears meet for a temporary standstill.

Speaking at the Reuters Investment Outlook Summit, Technical Analyst Robert Prechter makes a number of predictions:

1. US likely to AAA rating
2. Oil rally has limited upside
3. Deflation may limit gold rally and stock gains

http://search.us.reuters.com/query/?q=prechter&s=US&searchWhere=NEWS

Things may be falling into place for a key decision to be made. We got the USDJPY at a 38.2 retracement (106.67) of the weekly high-low which is likely to act as a strong resistance.

In the meantime, EURUSD is supported by the 61.8 retracement (1.5566) of the daily high-low while gold is also likely to have strong support at USD 886.