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Friday 21 March 2014

Going for Gold

Today is a very important day on SPX. Yesterday the bulls rallied it all the way back up to range resistance at 1874/5, the level seen at the last two rally highs and the neckline for what looks a lot like an IHS, but isn't because the decline into it is too short. Nonetheless if that level is 1874/5 level is broken the 'IHS' target in the 1910 area will most likely be made. Looking at ES we may will see a gap over that resistance at the open, and as long as bulls can avoid that opening gap being filled, I would see that as bullish confirmation that the next move up towards my 1965 target from last June has now started. I have rising channel resistance in the 1910-20 area and rising steadily. If we see a big fail at this resistance today then my alternate bear H&S scenario is still in play on a break below the rising channel. SPX 60min chart:
SPX broke back over the daily middle bollinger band yesterday and as long as SPX can break up through 1874/5 today the next target is the upper band, currently at 1887. SPX daily chart:
I haven't been posting many gold charts this year, but I was saying in January that the gold bull market might well be resuming and that the most interesting setup this year might well be buying into that. Since I last posted my GLD daily chart on 7th Jan GLD has broken the falling channel and has broken back over the very important 150 DMA. It has now developed and broken down from daily negative RSI divergence and the last seven divergence signals like this marked on the chart all made the setup target, which in this case would be the 30 level on the daily RSI 14. I think this is most likely going to be the last decent retracement before the likely new bull market on gold breaks up hard so I'll be watching this carefully. GLD daily chart:
On the 60min chart GLD has formed a rising megaphone from the last low which broke up slightly from at the last high, indicating a likely break down soon. We may see an H&S form at the possible 127.5 neckline, in which case I'd expect to see a right shoulder rally into the 129-30 area before the break down towards a target in the 121-2 area. I'm watching this mainly for the buy opportunity at that low but this is an interesting short setup as well. GLD 60min chart:
This is an important day for the bulls and at the moment it looks as though they will gap up hard over resistance at 1874/5. If that gap holds today that break up should be respected and I would expect to see 1900 tested and broken in the next few days, on the way to my main wedge target at 1965.

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