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In a message dated 97-07-23 23:02:48 EDT, you write:
<< Attached is an P&F chart of Dec. GC with box size=1.5, and a three-point
reversal method. If the GC closes below our 319.50 support line, can we
make a fare assumption this market is about to take a major dive down!!!>>
Well, it's hard to argue with a bearish view of gold or the XAU. For the past
year we have consistently made lower lows. I'm of the view (long term) we're
going to retest XAU 65 of 11/1992.
This of course is long term, which I suppose is another way of saying, no
time limit, a pretty safe statement. Short term, based on contracting B
Bands, initial upside resistance I think is around the 98-99 area. How far
we bounce down will be the true test in judging if this index has any legs at
all to the upside. As mentioned, for more than a year, we continue to make
new lows. Not a good sign for the bulls. There is no indication yet, a
retest of lows will give support to substantially high values.
If we work our way down to 65, there may be some stiff resistance at 83 - 85.
I guess open to discussion, is how long trendlines remain valid, and how
long they "remember", but four times between 1987 and 1989 we bounced off XAU
values between 83.79 and 85.23. Some of these bounces lasted several months,
retracing more than 50%. The recent bounce from 85.75 may indeed be a short
term bottom, if you wish to give any weight to a trendline going back to
1987.
Trendlines of course are drawn in the anticipation of being broken, and the
story that implies. I think if we continue with failing retests of recent
lows, taking us below XAU 83, working our way down to 65 is probably in the
cards (long term).
This morning we are certainly testing the short term lower trendline, drawn
from the 7/7 lows. As I write the XAU is 92.77, moving it below this short
term trendline. I see this as critical for the short term play. Long term I
agree with your bearish view, but this 83 - 85 level will probably provide
short term support, and opportunities for "call" plays, in my opinion.
PJLaird
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