Trader Dan's Market Views: 08/15/11

“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)

"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people. Source – The Declaration of Independence

Monday, August 15, 2011

Gold - 4 Hour chart update and comments

I've moved back over to a 4 hour chart for the time being to try to get a bit tighter view of the recent trading range that gold has been carving out over the last few sessions. The chart resistance and support levels being created detail the range as gold is still finding buyers on dips below $1740 but has not yet been able to clear $1780.

If it pushes through $1780, it looks to me to have enough momentum to try to take another shot up towards $1800. How it reacts there will be extremely important.

The overall chart pattern is still being dominated by that big down day from last week after the market pushed through $1800 but then failed to hold that level after subsequently setting back.

Bulls would not want to see this market spend much time below $1730 or so before rebounding as that would portend a drop towards $1700 initially.

Volume is easing somewhat ( a welcome relief I might add) reflecting a lull in the emotions of traders. After last week's wild ride, a lot of guys are just worn out and glad to be sitting around on the sidelines or trading a bit smaller in size while awaiting some more definitive signals.

One brief note about the action in the HUI in Monday's session. Once again it has pushed right up into a very stubborn and formidable chart resistance level near 580. It has had trouble dealing with this area since May of this year. Going back to the beginning of the year, it had managed to briefly penetrate the level but spent spent less than a month above it before succumbing to selling pressure and failing to hold its hard fought gains. If it can clear this level now, and if it can hold those gains going into the end of the week, then we should have something to hang our hats onto from a technical perspective. If it sinks back down away from 580 again, it will just further reinforce how significant this level is becoming on the charts. Apparently, there is a lot of pain coming to short sellers if some of the shares rise much further from today's levels and they are making a concerted effort to prevent that from happening. Any further move higher in gold is going to complicate their efforts immensely.