Spot Gold Prices - Daily Candle Chart 2nd March 2009

Last week was an interesting one for the spot gold price, with five consecutive down days on the daily chart, finally ending on Friday with a long legged doji candle for the day. With prices now firmly below the 9 day and 14 day moving averages we need to consider whether this is a temporary reversal before returning higher to break through the $1000 per ounce level, or a pullback to retest support in the $915 to $925 region. The only indication we have at the moment is to look at the weekly candle chart, and with last week’s candle providing a bearish engulfing signal on the previous week, then we need to be cautious in our trading for this week. Clearly we have two conflicting signals, depending on which time frame we are considering, which is often the way, so we need to be very clear as traders, whether we are placing a long term trend trade, or an intra day short term profit position. As I said earlier, on the weekly chart we have a bearish engulfing, which would suggest in the longer term we may expect prices to fall further, but as always we will need to wait for this to be confirmed in next week’s chart. On the daily chart we have a long legged doji, which suggests a turning point in the short term, and so for day trading we could see prices move higher today. Again we will need to see this confirmed by today’s price action. In summary, for the longer term we need to wait and see whether the bearish signal in the weekly charts is indeed confirmed, and for day trading a small long position ( but very speculative ) may be the option for today with a stop loss below the $910 to $915 region as outlined above. Despite the correction I still believe that the upside momentum is still intact given there’s no end in sight for troubles in financial sector.

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

Support:    $925.85 (Friday’s low)                                      Resistance: $978.45 (high of 25/02/09)

Support:    $910.00 (low of 11/02/09)                                   Resistance: $965.78 (9 day moving average)

Support:    $902.39 (40 day moving average)                             Resistance: $962.85 (Friday’s high)