DJ. CHARTING TRENDS: Time's On The Side Of The Gold Bulls
By Stephen Cox, CMT
A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)--The strong rally of Comex gold futures had to happen.
That is, if the leading contract, near $403.00 per ounce late Wednesday, is
ever going to make it to $457.70, or to $488.40, by mid-2005. Those lofty
targets are credible, according to the monthly chart. But, of course, mid-2005
is a long way off as these things go and quite a lot could happen between now
and then.
For example, despite its impressive rally Wednesday of nearly $10/oz., the
leading August contract is testing a potential top at $402.20 resistance. If
the rally's blocked by resistance, a corrective selloff would take the contract
to support between $389.30.
Trading below support would be a breakdown of futures' May-June uptrend. In
that case, traders could look for a move down to a potential bottom between
$384.70 and $383.20. Such a correction wouldn't damage the long-term charts,
but it could considerably delay the projected mid-2005 test of $470.00-area
resistance.
And in case the May-June uptrend is extended by a move above $405.00, the
leading contract would quickly run into "bull trap" resistance at $407.30,
which may be an important top.
Long-term traders shouldn't consider a move up to the $470.00 area until the
leading contract takes out heavy resistance at $432.00. The good news, for
these traders, is technical evidence that $432.00 resistance could be tested
this month. If not, then by late September.
-By Stephen Cox; 201-938-2064; [email protected]
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