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.
