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Gold – Hugged the Uptrend Line
By Louise Yamada Technical Research Advisors, LLC ("LYA")
December 6 (King World News) - Gold spot price (GOLDS-1,708.82, see Figure 29), following the 96% rise from the 2009 breakout carrying through 1,900, suffered a swift 20% decline, thereafter bouncing back for the recent rally into the prior resistance. Gold pulled back again but so far has been holding above support at 1,600 in a series of higher lows, and above the 2008 weekly uptrend which currently rests at 1,515.
Technically, the degree of the run both up and down has suggested the need for an extended period of repair / consolidation. We do not believe this process is over. Interestingly, one can note that the weekly momentum model did not register a Buy signal on the recent rally (see arrow) and continues to decline. The technical implication is that there is more repair to take place, possibly even inclusive of further price attrition.
Our primary support remains 1,600, but the lower level of 1,515 at the uptrend intersect should not be discounted. In particular, if equities decline to the extent that there are margin calls, if investors cannot sell what they want to sell, they sell what they can, and as in 2008, Gold retreated with equities in just such a scenario.
Additionally, the U.S. dollar is rising amid the global crises, just giving a long-term momentum Buy signal, and could hamper the upward progress of Gold over the short-to-intermediate term, into next year, as occurred in 2008 with the dollar strength. But in this topsy-turvy market, Gold could buck the dollar trend and retain a safe haven status. In that event, any sustainable move through 1,800 could result in a challenge of the former high.
Longer-term, Gold remains in an uptrend and we include a statistical study in favor of Gold longer term in the Special Feature below regarding negative interest rates.
Silver
Silver spot price (SILV-31.97, see Figure 30) has been weaker than Gold, and the recent rally failed at the resistance of the broken support near 35. If support at 30 fails to hold, Silver could be due to pull back toward the 2008 uptrend near 25, with the outside, worst case, possibility that even 20 (a full pullback to the multi-year breakout) could also occur. The strong and swift 170% advance into 2011 followed by the 46% decline will also require time to repair, inclusive of price pullbacks.
Notice that the weekly momentum model continues to decline (see arrow), suggesting potential further price attrition, or at least further sideways trading. Here, too, the corrective behavior could carry into next year against dollar strength. Eventually, were price able to move through 35-37, a challenge of 40 could again come into play, but we don’t see this over the near term.
Louise Yamada
Copyright 2011 Louise Yamada Technical Research Advisors, LLC. All rights reserved.
October 7, 2011
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The above snippets and charts were a small portion of her incredible 41 page report she puts together each month. Louise is legendary for her technical work on Wall Street. She formed LYA an independent research company in 2005 to provide the same in-depth research that clients had come to expect during her 25 years at Smith Barney (Citigroup) as a top-ranked "Institutional Investor" technical analyst.
As Managing Director and Head of Technical Research for Smith Barney, Louise was a perennial leader in the Institutional Investor poll, and was the top-ranked market technician in 2001, 2002, 2003 and 2004, before going independent. To subscribe to Louise Yamada Technical Research Advisors, LLC ("LYA") CLICK HERE.
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
Louise Yamada - Special Gold & Silver Technical Update
With gold hanging around the $1,700 level and silver near $32, today King World News is pleased to share with KWN readers a piece of legendary technical analyst Louise Yamada’s “Technical Perspectives” report. This information is not available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally.
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
December 6, 2011
