Daily Candle Chart Spot Gold - 26th February 2009

Yesterday’s price action was interesting for several reasons and on the day we ended with a doji candle with a long upper shadow, which penetrated the 9 day, but with the 14 day average providing support on the day. Initially as the equities markets went down spot gold moved higher following the previous day correction which had attracted bargain hunters. Later on gold gave up its early trading gains finishing the day another $8.62 lower as the recent safe haven buying faded. From a technical perspective the 14 day moving average seems to be providing support, and it is interesting to note from this morning’s price action that this seems to be offering support once again at the $952 per ounce level. In addition the lowest price this morning is identical to that of yesterday, which may be providing us with a further clue that the move is coming to an end.

Some analysts believe that a higher crude oil price and  recent attempts to find a floor in equities has attracted investors away from gold,with others suggesting that this could be due to a lack of fresh commitments into gold exchange traded funds which are physically backed – neither of these views are ones I subscribe to myself. The underlying problems in the market still remain the same, and are likely to be around for many years to come, with the reversal of the last two days, simply the market taking a breather before moving higher once again.For long term positions the outlook is still bullish, and for day trading today, as for yesterday, I would suggest that the current short term reversal provides us with an ideal opportunity to find entry points for our new long positions.

The short term trend is sideways while the medium and long term trends are bullish.

Support: $943.55 (yesterday’s low) Resistance: $987.28 (high of 18/02/09)

Support: $939.70 (low of 17/02/09) Resistance: $978.45 (yesterday’s high)

Support: $931.90 (low of 13/02/09) Resistance: $967.82 (9 day moving average)