Spot Gold Price Chart 19 Jan 2010

Spot Gold Price Chart 19 Jan 2010

The gold spot price continued its sideways consolidation yesterday trading in an extremely tight range and ending the gold trading session with a narrow spread up bar with a tiny wick to the lower body.  Technically the price action of the last two weeks is now in the process of forming a minor pennant which could well become the prelude to a breakout in due course in much the same way as we saw in September 2009 which prompted the dramatic surge higher in gold prices.  As always the longer such sideways consolidation continues then the more dramatic will be the eventual breakout and the question, as always, is whether this will be to the upside or the downside.  Although at present it is difficult to judge the direction of any breakout, given the recent recovery from the lows of $1080 per ounce and coupled with the candle patterns of the last 2 weeks which are characterized with lower wicks, my feeling is that the break will occur to the upside as a continuation of the recent rally.

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Support & Resistance for the Gold Spot Price (Daily Chart):

S1:   1130.98   R1:  1138.90

S2:   1126.17   R2:  1142.01

S3:   1123.06   R3:  1146.82